Alternatives to pay rises becoming increasingly viable
A large percentage of Singaporeans say a sense of meaning in their careers is important
IT’S that time of the year.
Yes, year-end festivities and holidays are all good, but what may be more important for hardworking folks are the eagerly anticipated bonuses and pay rises for the new year.
Indeed, cold hard cash is what employees want, based on the results of a survey released in June by human resources management solutions firm ADP. Of the 1,916 workers in Singapore polled, 71 per cent identified salary as the most important factor in a job, compared with 55 per cent among employees globally.
Given that, workers here can find some comfort in the results of another survey released this month by recruitment agency ManpowerGroup. It found that employers in Singapore plan to give out bigger bonuses and salary increments.
Of the 525 Singapore employers surveyed, 89 per cent intend to award bonuses averaging more than one month – a five-percentage-point increase over the previous year.
When it comes to salary increments, 82 per cent plan to increase salaries by at least 3 per cent.
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Still, ADP’s survey showed that less than half of workers (48 per cent) here are satisfied with what they earn, a stark contrast compared with the region (67 per cent) and globally (65 per cent).
“We anticipate pay increases in 2025 to be more conservative, with bigger differentials across different industries,” says Yvonne Teo, ADP’s vice-president of human resources (Asia-Pacific).
Money no enough?
When direct salary increases become a significant financial strain, businesses may need to explore alternative approaches to achieve their goals, says Dr Xu Le, lecturer from the department of strategy and policy at the National University of Singapore (NUS) Business School.
These alternatives should offer a more cost-effective solution for employers compared to direct salary increases, while still delivering satisfaction to employees and incentivising them towards improved productivity.
But what alternatives are people willing to accept?
ADP posed the question to Singapore workers and found that when it comes to pay rise alternatives, a one-off bonus (44 per cent) or extra paid days off (38 per cent) would be acceptable – though in both cases, women favoured these options more than men.
Its 2024 Worldwide Guide to Acceptable Alternatives to Pay Rises polled 34,000 workers across 18 countries and found that alternative perks, such as one-off bonuses, upskilling opportunities and enhanced well-being benefits, are becoming increasingly viable for employers and valued by employees globally.
“These alternatives are particularly relevant in Singapore, given the city-state’s focus on digital transformation and mental work-life balance,” says ADP’s Teo.
Adrian Choo, career coach and chief executive of human resource consultancy Career Agility, says some companies have provided perks such as transport allowance, more days off or even improved medical benefits. Others, such as multinational corporations dealing in consumer electronics, give “generous vouchers” for their company’s products or services.
Linda Teo, ManpowerGroup Singapore’s country manager, says that if a company’s main goal is to acknowledge and motivate employees or attract and retain them, alternatives such as performance-based incentives, stock options or profit-sharing can serve the same purpose.
“While these are still financial in nature, the associated costs of these one-time incentives are typically smaller than pay raises, without compromising their impact on employee motivation,” she explains.
Performance-based bonuses are typically one-off payments which show an employer’s appreciation without affecting the regular salary structure.
Meanwhile, stock options or profit-sharing incentivise employees to contribute to the company’s long-term profitability and growth, while fostering their ownership of and commitment to the organisation.
“While this is more commonly provided to those in senior management, it has been gaining popularity – especially among startups – as a plan for all employees,” she says.
Make work meaningful again
And while money is still one of the top considerations for new hires, when it comes to attracting and retaining employees, it may not be the only factor at play.
The Quest for Meaning at Work report released in April by Jobs_that_makesense Asia and Manpower (part of the ManpowerGroup) showed that 97 per cent of Singaporeans found having a sense of meaning in their careers important.
It also revealed that the top action employees expect from their companies revolves around improving working conditions (82 per cent), including offering flexible hours, comprehensive health insurance and equal pay.
“Taking this into consideration, employers can offer benefits that are not part of the base salary but count towards the employee’s total compensation package,” says ManpowerGroup’s Teo. “These benefits can be tailored to the specific needs and preferences of the workforce and can be just as valuable, if not more so, than a salary increase.”
Examples include more paid time off or flexible work arrangements such as allowing employees to work remotely, having flexible hours or implementing compressed work weeks.
“These alternatives can enhance work-life balance and job satisfaction, helping to attract and retain employees in the event a pay rise is not possible,” she says.
Still, the success of these alternatives depends largely on whether employees see value in what’s being offered and whether it is being perceived as given in “good faith”, says Career Agility’s Choo.
Hence, transparency and alignment between employers and employees are crucial.
“Employers have to understand what their employees need and provide initiatives that genuinely address their professional and personal needs,” says ADP’s Teo. “They must also communicate the value of these alternatives clearly and openly.”
But while such alternatives are both achievable and generally acceptable, ManpowerGroup’s Teo cautions against companies being overly dependent on them.
“Employers should ensure that salaries match market rates and allow employees to cope with the cost of living. This balance is crucial to maintaining employee satisfaction and retention in the long term.”
Levelling up negotiation skills
Whether it is for a higher salary or alternatives, it is important for employees to work on negotiation skills. And that requires preparation and professionalism.
ManpowerGroup’s Teo says workers should research industry standards and understand the market rate for their roles to justify their compensation request with concrete data.
Those negotiating for higher pay can broach the topic directly with their manager and be prepared to highlight their skills, experience and contributions, as well as additional responsibilities they’re willing to take on.
“During negotiation, employees should maintain a positive and professional demeanour, emphasise their current value and the market rate, as well as focus on constructive dialogue and finding common ground.”
But it’s also important for them to be open to alternatives if a direct pay rise isn’t feasible and show willingness to find a mutually beneficial solution.
Career Agility’s Choo says salary reviews should be approached as a six-month campaign – building up the visibility of successful projects and achievements and highlighting the additional value one has created for the company.
“Be brave to ask for what you think you deserve, within reason.”
In addition, presenting a competing job offer with a competitive salary package can also be a strategic move, as it demonstrates the employee’s current market value and professional demand, says NUS’ Dr Xu.
Even if the outcome of the negotiation is not ideal, employees should avoid making ultimatums or expressing frustration. Instead, they should thank their manager for considering their request and ask what they can do to achieve their compensation goals in future, says ManpowerGroup’s Teo.
“This approach demonstrates professionalism and a commitment to continuous improvement, which can leave a positive impression and potentially lead to better outcomes in subsequent negotiations.”
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