Issue Number 17, Autumn 2008


Executive Appointments

HRSolutions works with a significant and growing number of highly qualified senior executives seeking career advancement and prominent board appointments in public or private entities. The attractiveness of these roles lies in the opportunities that board appointments present.

However, according to a recent article in Company Director Magazine, the director talent pool is shrinking as fewer high-quality individuals are stepping up to take on the responsibility and challenges of company directorships.

This is cause for concern as such roles enable individuals to keep up with current developments, enhance reputation and provide the right industry and global experience necessary to build and maintain one’s profile. Moreover, being appointed a board director allows individuals to add real value to emerging and growing companies, providing a sense of job satisfaction and fulfilment from this role.

HRSolutions equips individuals with the right approach to obtaining such prestigious and sought-after roles through mentoring and coaching, skill and knowledge development, networking and the opportunity to attend symposiums with the Australian Institute of Company Directors (AICD) and the Committee for Economic Development of Australia (CEDA). 1 see note

As with any role, board appointments, carry additional risk. These include director liability, compliance demands and increased regulatory scrutiny, all of which will start to boost director and officer liability insurance premiums. This has led to a growing call by many for the poor risk/reward trade-off to be addressed.

According to Michael Andrew, KPMG Australian chairman, “The gap between director and executive remuneration has widened and the risk/reward benefit is completely disproportionate, with the risks to directors far higher. The time directors put in on sub-committees, due diligence committees and regulatory risk or compliance committees isn’t commensurate with the value they provide in private companies or other advisory roles.”2 see note

However, in changing economic times, Australia’s director pool is shrinking, with recent actions by local and overseas regulators, focusing director’s views only on the risks of the position. To address this imbalance it is anticipated that companies will have to change their attitude towards board members by offering extra board positions to promising directors, giving more exposure to upcoming individuals and providing the opportunity to work with more experienced directors.

These changing approaches may see board members gaining a broad understanding of operations, ultimately adding value to their organisations. If institutions shift their focus to work more closely with directors and exchange views with them, the seemingly small director pool in Australia will see growth and expansion. The services that HRSolutions, are tailored to meet the demands of the current market, and the expert guidance that senior consultants provide can be instrumental in achieving prominent positions that allow individuals to strengthen their board prospects.

1 subject to program selected
2 source: “Plugging the Director Drain, Company Director Magazine www.companydirectors.com.au

Demand to Drive Pay Rises in 2008

Staff development and retention has become a top priority for employers resulting in companies working to attract and retain skilled workers. With this in mind, bargaining power now essentially lies with the employee allowing for more attractive packages and salaries being offered. A survey of 1200 professionals in the Asia Pacific region has found that substantial pay rises are expected across the region in 2008, where 63% of Australians expecting a pay rise of up to 10% and 20% of workers anticipate a 15% increase to their pay packets. Richard Parnell, Asia Pacific CEO of Robert Walters who conducted the survey, has stated that “workforce demand is driving pay rises across most industries, and when worker confidence is at a high, employers need to be ready to respond to these sorts of demands or risk losing their top talent.”3 see note The pressure on companies to attract workers in a candidate-tight market holds promise for prospective employees.

3 Source: Human Capital Magazine “Pay Rises Expected” February 2008

Trends in Remuneration

Mercer’s September 2007 market issues survey found that 99% of respondents rated attracting and retaining talent as a top priority for their organisation. As a result, employers are placed under pressure to meet the needs of their growing business requirements by employing talented and experienced individuals who can deliver the greatest value to their organisation.

In high growth areas such as banking and finance, mining and resources, companies are regularly reviewing remuneration models and salary packages to attract the most able and proficient workers. Salary packaging has become increasingly common, and continues to develop as businesses become more innovative in salary package structure and content. This can range from laptops, mobile phones and cars to study assistance and work-from-home options. Salary packaging gives employees the opportunity to tailor their work rewards to their lifestyle needs. The biggest movers in remuneration are construction and engineering, education and research and health care with average increases in salary being as high as 6-7%.

Bargaining power has recently remained with the employee, as more and more employees expect flexibility from their workplace. However while salary packaging has become widespread, employers will still look to create an equitable remuneration balance within the company, still focusing on alignment of values, and overall performance of their staff to achieve business goals.

The overall result of the growth in salary packaging is that Australians are paying even less tax alongside tax rates dropping in recent years. The popularity of salary packaging remains in the fact that employees are given a pay to reduce some of their income that falls into their highest tax bracket. This includes additional superannuation contributions offered by some employers, where the tax on super contributions are significantly less than ordinary rates making this package option particularly attractive to older workers. Notebook computers are also an attractive salary bonus resulting in a full refund of a third of the purchase price and GST.

While remuneration packages are an important facet of staff attraction and retention, Mercer’s research has indicated that the job satisfaction of staff largely lies in the employees ability to assist in growth, flexibility and their ability to add value to the business functioning.5 see note

5 Source: “Tussle for Talent” HR Monthly– February 2008


In Brief

Outlook for Australian Markets:
(SHAW Research Monitor- March Quarter 2008)

Despite the recent volatility in the ASX, the Australian economy continues to show resilience partly based on its growing reliance on the Chinese economy which is currently booming and expected to sustain a 10% GDP growth in the foreseeable future. The latest statistics for Australia show that the economy grew by a very respectable 4.3% in the year to September 2007. For the markets to maintain strength over the next 12 months, the industrial stocks will have to make a larger contribution than they did in 2007, implying an on-going resources boom, recovery from drought and tax cuts. When we look at stock specific contributors to the market’s performance, the resource stocks feature prominently, with BHP and RIO being responsible for a total of 47.6% of move in the market.

While the risk profile for the US Economy has increased, the Reserve Bank of Australia is confident about Australia’s outlook with the latest economic outlook statement indicating that Australia should survive the global credit crisis relatively unscathed. “Recent information continues to indicate strength in the demand and output in Australia…the pressures arising from the global financial turmoil have been less pronounced than elsewhere.” The markets are clearly expecting another rate rise from the RBA in the short to medium term however the most likely outlook is for world growth to continue irrespective of a weaker US. The outlook for the market remains volatile but the high Australian dollar will remain a feature for some time. The resources story is expected to remain strong over the next year and add further value to the Australian market.

Book Reviews

Influencer: The Power to Change Anything- K. Patterson, J. Grenny, D. Maxfield, R. Macmillan, A. Switzer
Ideal for a CEO, you will discover why some managers have increased productivity repeatedly, while others have failed. It combines the insights of scientists and business leaders to demonstrate key influencing processes to enhance one’s business and personal life.

The Humm Handbook: Lifting Your Level Of Emotional Intelligence- Christopher Golis
Within the ‘Humm Handbook’, you will come to a greater understanding of the emotions found within oneself and within others. By gaining insight into dominant behaviours and desires readers will improve their Emotional Intelligence (EQ) by discovering the emotional integrity behind one’s actions.