When it comes to remuneration and career trajectory, Hong Kong’s financial sector workers are highly aspirational. Employees will jump ship after a few years if the numbers don’t add up and career progress stalls, according to a survey by recruitment firm Selby Jennings.
Bonuses, under intense scrutiny since the financial crisis, remain as relevant to as ever, especially senior bankers at large financial institutions, but restrictive structures have dented their appeal for some.
In a market report conducted early last month, Selby Jennings polled 10,000 employees in front-, middle- and back-office positions at Hong Kong financial institutions to determine what factors motivate their employment decisions.
It came as no surprise that the majority of respondents said salary would be the primary reason for parting ways with their employer. Some 26% of those polled said a "low salary" was a deal breaker. The second major reason for leaving was the lack of a clear career path, with 16% saying career advancement -- or the lack thereof -- would strongly influence their decision to stay or go.
Perhaps the most interesting finding to come out of the survey had to do with employees’ perception of counteroffers. Nearly half the banking professionals surveyed indicated they would not entertain a counter offer from their present employer.
That was not always the case. In the years following the global financial crisis, counteroffers were given serious consideration and often accepted, said Duncan Kennedy, head of Selby Jenning’s Hong Kong office. “The market was less stable and employees realised they might benefit from movements within the organization,” he told FinanceAsia.
As the market stabilised, the view on counteroffers changed markedly. Employees became more aware of the pitfalls of accepting improved offers from current employers.
Kennedy said those who accept counteroffers may be exposed to resentments and unwittingly create team tensions, with colleagues sensing a preferential deal and drawing unfavourable comparisons to their own packages, which they now deem inadequate.
As recently as three years ago banks were still engaged in bonus-based bidding wars for talent, Kennedy said. But bonuses are “no longer the key deciding factor (in employment decisions),” he added, noting that bonuses remain more relevant in senior performance-weighted segments.
“Base (pay) and career progress are the primary drivers,” said Kennedy. “It’s about immediate financial gain”.
That may depend on the bank. "Some banks restructured bonuses so there's more of a non-cash component," a Hong Kong-based analyst with a major European bank told FinanceAsia. "Especially for senior guys."
Junior members are still getting cash - but less of it, he added.
In the post-crisis years, banker bonuses drew the attention of regulators and the scorn of the public. In the wake of criticism bonus structures changed, and in markets where they were capped or calculated as a percentage of base salary, the workaround was to raise the base.
The Selby Jenning's survey does not suggest that bonuses are being repackaged as higher base to sidestep rules or manage perceptions.
"Base (pay) certainly has been bumped up," the analyst acknowledged. "But some segments that are doing well like debt capital banking -- a lot of issuance this year -- are not going to see a drop in bonus size, just a larger vested portion with a longer lock-ups."
"Shares are easier to claw back than cash," he said.
Hong Kong employers typically have two to three years to improve the circumstances of employees before they seek a better deal elsewhere, according to the survey. Kennedy said this was a reflection of the aspirational character of the Hong Kong workforce.
Respondents showed ambivalence toward perks like flexi-hours and fringe benefits, but expressed a fairly strong desire for so-called work-life balance -- the one seemingly contradictory finding in a survey that clearly pointed to base salary and promotion prospects as the prescriptions for retention.
As for the bonus environment, the analyst said it remains restrictive but he expects the "conversation will change."