Over four fifths of Singaporean firms have launched initiatives in talent retention, employee engagement and leadership development, in a bid to drive productivity as costs bite, according to a survey.

Eighty two per cent of the Singapore-based companies surveyed by management consultant Hay Group, are running such initiatives. They believe it will contribute to higher business performance. Some of the initiatives include developing strategic reward practices, retraining employees, redesigning jobs, outsourcing non-core jobs, and reemployment of older workers.

The survey was conducted in March and the 451 companies surveyed were both local and foreign-owned, from both the public and private sector.

Working smarter, not harder

The report indicated that 51 per cent of the surveyed companies are streamlining their business processes through workflow redesign, and 42 per cent are investing in ramping up their technology infrastructure.

With labour costs forming a large expense component for many companies, and human ingenuity the main source of competitive advantage, unlocking the productivity potential of human capital will be the competitive advantage of successful firms.

Victor Chan, regional general manager (Singapore and ASEAN) for productized services at Hay Group, said: “In order for us to understand the productivity equation, organisations need to define the meaning of productivity in their context. In our view, productivity improvement must ultimately increase business results and contribute to improvements in the bottom line.”

He added: “From our report, most organisations focus on streamlining business processes and technology improvements to increase output. However, they must also focus on driving workforce engagement to harness the full benefits of their business processes and technology investments."

Studies have shown that the top one per cent of the workforce is 12 times more productive than the bottom one per cent. On average, engaged employees are 43 per cent more productive.

Salary and incentives

Pay rises and financial incentives are another way of increasing productivity. 

The actual average salary increase for 2012 is 5.2 per cent, while average salary increases for 2013 are forecasted at 4.5 per cent, said the report.

Chan said, “When making recommendations on salary increments, organisations take into account factors such as the uncertainty in the Euro zone, Singapore’s rising inflation index, tight labour market and restrictions imposed on foreign worker recruitment. These factors would play a huge part in the 2012 salary increase movement of 5.2 per cent.”

The Hay Group report also showed that the actual average variable bonus (i.e. performance-based bonuses excluding annual wage supplement, contractual bonuses) is 2.5 months for a 12-month period. This is slightly lower than the average of 2.7 months in 2011.

A breakdown by employee level revealed that middle management received an average variable bonus payout of 2.7 months, followed by 2.6 months for senior management, 2.5 months for junior professionals and 2.2 months for clerical support.

The forecast average variable bonus payout is 2.3 months for the coming 12 months.

Hiring outlook for 2012

Reflecting the uncertainty in business sentiments, 37 per cent of the surveyed organisations plan to increase staffing levels by five to 10 per cent, compared to 50 per cent this time last year.

The Hay Group report stated that the employee group in high demand are technical specialists (47 percent), middle management (30 percent) and junior professionals (25 percent). The main focus of recruitment is on engineers, salespeople and finance and accounting.

Chan said, “It is not surprising that the sales function features highly in the top three most recruited. Organisations are aware that having a high achieving sales team could generate surplus revenue streams to cover revenue gaps especially in the current economic context.”