Tough Times Dampen Salary Expectations

Twelve months have proven to be a long time in terms of recruiting for the advertising, marketing and PR industry. This time last year, talent was in the clear ascendancy. A shortage of skilled professionals in the market meant that employers had to pay a premium if they hoped to attract and retain the best talent.

A lot has changed since then,however. While the industry across Asia is still experiencing a lack of talent, there is one major difference from 2008:few companies are in a position where they are willing,or able, to pay the talent what it may feel it deserves.

In terms of internal salary increments, a global economic recession is definitely not the best time to be asking for a pay rise: “The global financial crisis has led to an employer-driven market and a downward pressure to cut costs,which means companies will now be likely to take a more cautious and conservative stance with regards to compensation and remuneration packages,” says Peony Lim, a manager at Robert Walters Singapore, whose remit includes sales and marketing.

At the start of 2008,the best talent in the region could expect to be met with double-digit internal salary increases across the board, as employers invested to keep them away from predatory rivals.This is a situation that is unlikely to be repeated this year.

“Salary levels will be flat,while some companies may even be introducing small pay cuts,” points out Steven Pang, regional director, Asia, at recruitment specialist Aquent. “Only a select few will be able to offer salary increases and even then the majority of these will be just to beat inflation. Double-digit increases are just no longer in the market.”

The same is true for those candidates looking to switch jobs. In an industry where job loyalty is a rarity and the majority of employees on average stay in their position for two years or less, the migration of talent has for some time been a key challenge for employers.

But with company budgets being kept firmly in check, the industry can expect less movement in 2009. Companies are reluctant to add new headcount, and where external hires are necessary, the packages being offered are much reduced.

“Salary levels were climbing in 2008, with many candidates moving roles expecting a 10 to 25 per cent pay increase,” says Lim, in reference to the Singapore market. “This will change in 2009. Candidates’ expectations need to be managed and I see a more realistic increase of 10 per cent to a maximum of 15 per cent.”

Even if healthy salaries were still being offered by the market,one additional problem is the caution being shown by the talent itself. With fewer jobs in the market, in-demand candidates are far less likely to change jobs, especially in such uncertain times.

“For one set of talent, the key right now is job security over everything else,” says Aruna Alimchandani, director, sales and marketing at Hudson Hong Kong.“If they have been with a company for four years and feel secure, they are unlikely to leave that for a job where there may be a risk of being made redundant.”

But while the recession may be resulting in a temporary halt on stellar salary packages, the overall recruitment situation in the marketing sector is far from negative.“We feel the first six months of the year will be a period of stability and caution, with most clients taking a ‘wait and see’ approach,” confirms Alimchandani

Indeed,as the storm clouds continue to gather above much of the global economy, the advertising, marketing and PR industry in Asia-Pacific actually looks better placed than most to see out the financial crisis with only minimal casualties.

In terms of advertising agencies at least, 2009 will for the most part be about consolidation rather than panic. Although agencies are being faced with reduced client budgets, the majority will still need to hire, regardless of external pressures, especially for critical positions. 

“Agency side, we are seeing a lot of short-term tactical work being done,” says Helen Davies, a consultant at Talent2 Hong Kong. “This may lead to a move towards more short-term contracts. From a headcount perspective, companies are not willing to bring new people onto their books but still need manpower; so will bring them in on a project basis.”

For a few, the recession could even be a time of increased opportunity. Companies that are in a strong financial position will potentially be looking at the current job market as a chance to significantly upskill their current workforce, setting themselves up for future growth.

“These organisations will be able to pick up higher quality talent than in a competitive market place,without the premium price tag that comes with a buoyant, candidate-driven market,” says Lim.

However, Eliza Kennedy, manager of Robert Walters Hong Kong’s sales and marketing division, advises employers to be careful when recruiting during a recession.

“Some caution is needed in recruiting from the candidate pool of recent redundancies, although this is not to imply that those retrenched are necessarily poor performers,” she says. “However the best marketing professionals are unlikely to be moving in the current market and consequently there will continue to be challenges in recruiting these people.”

Those countries that have so far been able to escape the worst of the recession may also be in a position to turn the situation to their advantage. In China, for example, the financial crisis could turn out to be a positive.

“The last few years [in China] have seen close to unmanageable levels of growth and demand on the talent market,” says Duncan Cunningham, regional director for Greater China at Aquent.

“The increased fluidity of talent in other markets should act in China’s favour. The skill sets and experience of the local talent pool in China have become increasingly more advanced over the last few years, but demand still outstrips supply and the country will continue to rely heavily on importing talent over the coming years as the domestic market continues to evolve.”

Another bright spot - for talent at least -is the continuing industry shortfall of skilled candidates in the digital field. In Japan, for instance, the demand for top-level digital talent is still dominating the recruiter’s agenda. Says Ralph Saunders, Consultant, advertising and communications, Hudson Japan: “Digital ad spend will rise 20 per cent or more in 2009 while overall ad spend will fall at least two per cent, signalling continued demand for interactive producer/developer roles as well as for digital marketing and digital ad sales roles.”

“Clients are now looking for more creative and cost-effective ways to work,” agrees Alimchandani.“As such, traditional media, such as print and TV, will be affected more, while out-of-home and digital, where you are closer to the point of sale, are the type of areas that will be able to sustain during a downturn.” 

In fact, in a tight market, with lower than usual salary incentives and fewer high-level candidates looking to switch employers, it may well be the rerecruiters themselves who are most impacted by the downturn.With costcutting in mind, a number of leading holding companies have already put a freeze on the use of headhunters.Over the next 12 months, the recruitment industry will need to step up and prove its worth.

“Recruiters need to be able to market the company, not just the position,” says Davies.“We have to spend more time with the company and really understand the business and communicate this to the candidates.This is something we should be doing anyway, but there is even more pressure on us now.”

Aquent’s Pang agrees: “We have to be selective on working with clients that genuinely have an interesting proposition to offer. We have to be better at picking who we work with and need to be better at how we sell.”