ARE YOU EARNING ENOUGH?
A rejuvenated job market across Asia is good news for finance executives, but some jobs are hotter than others. The results of CFO Asia’s latest salary survey show where to look.
By Justin Wood

For Shawn Wang it was an opportunity he couldn’t refuse. After years working in the global capital markets division of PricewaterhouseCoopers – many of them spent in the US and the UK as well as his native China – Wang decided to jump ship. In September 2004, he joined Baidu, a Chinese-language internet search firm, as its CFO.

At the time, recalls Wang, he was being peppered with job offers from all sorts of young Chinese companies eager to grow. All of them were looking for heavy-hitting CFOs capable of handling an IPO in Hong Kong or New York. But it was only when Baidu came calling that Wang’s head was turned.

“When I handed in my resignation to the chairman of PwC, I said I thought I’d always regret it if I didn’t take this opportunity,” recalls Wang. “The potential of the internet in China coupled with the strength of the economy and the passion and dynamism of the people at Baidu left me with no choice.”

In the year-and-a-half since he joined, Wang has concentrated on building the foundations to support Baidu’s long-term growth. His finance team has grown from ten to more than 30; he’s set up a control and internal audit function; he’s built a legal team from scratch; installed ERP software from Oracle; put in place new reporting processes; set up a purchasing function; and organized a budgeting team. And that’s not to mention floating the company on Nasdaq in the US in August last year.

“I still get calls from headhunters every month,” Wang reveals. “But this is a very exciting company. Our Q3 revenue in 2005 was 89m renminbi (US$11m) – that’s year-on-year growth of 174%.”

Wang’s experience shows just how vibrant the market for CFOs in China has become. Not only is there huge demand and massive opportunity for senior finance managers, but the supply remains relatively limited, making China easily today’s hottest job market for accounting professionals in Asia. Overall, say experts, the finance recruitment scene in Asia has been relatively buoyant in 2005 and promises to be so again in the year ahead. But certain countries – like China – and certain types of jobs stand out as offering more opportunities than others for executives looking to further their careers and boost their incomes.

Wage gauge

To help shed light on the current state of earnings among the financial community, CFO Asia polled its readers in mid-December, asking them to reveal their “on-target” salaries, a figure which includes not only base pay but also the expected value of cash bonuses, stock-based pay, and benefits such as company pension contributions or medical insurance. In all, a total of 880 CFOs, treasurers, controllers, and other finance professionals from 12 Asian countries took part.

To make the survey as useful as possible, respondents were asked not only what their job title was and how much they earned, but also how much revenue they were personally responsible for. Thus, while the finance chief of a billion-dollar business and the chief accountant of a small subsidiary may both have the title “CFO”, our survey helps to separate such positions according to the size of the operations they manage. As expected, CFOs, controllers, and treasurers with greater revenue responsibility earn more than their counterparts overseeing smaller businesses.

Of course, different types of companies – private versus public, for example – will complicate the picture, and some industry sectors pay more than others. Nonetheless, the results should give finance executives a useful guide with which to benchmark their own salaries against those of their peers.

Another complication is the fact that salaries vary widely across the many countries within Asia. The table titled “League of Nations” gives a flavor of those disparities. Not surprisingly, Hong Kong and Singapore top the league while countries such as Malaysia and India pay less well.

There are also clear differences in how much finance teams working for Asian firms earn when compared to their peers working for the regional operations of Western multinationals. CFOs and finance directors at Western firms tend to earn more when the level of revenue responsibility is small. However, the picture reverses for finance chiefs overseeing very large operations. The fact that big Asian companies are likely to be listed, while the Asian operations of large Western companies are not, may well explain this pattern.

What’s hot and what’s not

So for CFOs looking to pump up their income and push their career forward, what segments of Asia’s job market stand out? China is certainly an exciting market. David Yeung, a partner in the Beijing office of Heidrick & Struggles, a firm of headhunters, describes the market as “very buoyant”. It’s not uncommon, he says, for CFOs to raise their salaries by 30% to 40% when they change jobs.

“A lot of the demand is coming from private companies looking to float and move into the next stage of their growth,” he says. But that desire to tap the capital markets, he adds, often means that companies end up looking for the wrong sort of CFO. “A lot of companies want to hire investment bankers who know how to sing the right song to the stockmarket,” Yeung says. “Some firms even ask for CFO candidates who can speak English with an American accent because they think that will help with a listing in the US.”

What these companies don’t realize, Yeung points out, is that they really need financial managers with a more rounded background, who are capable of building the right financial systems to support the company in its day-to-day operations. “I tell them that IPO experience isn’t always necessary,” Yeung says. “An IPO is really just another project. You bring in experts, the lawyers and bankers, and use them as part of the project team.”

It’s not uncommon for Mandarin-speaking CFOs from Hong Kong, Singapore, and Taiwan to be hired as finance chiefs in China to help fill the rising demand. However, many of them tend to work for multinationals rather than local companies. “Mainland Chinese CEOs usually want their CFO to be a Chinese national because there’s a better cultural fit,” explains Yeung, “but multinationals are much more relaxed.”

For Wang at Baidu, the sizzling job scene not only means fending off a constant stream of job offers; it also presents headaches when hiring his own finance team. “It’s definitely tough recruiting good finance staff,” he notes, “and salaries are rising rapidly.”

In particular, Wang has had trouble finding senior staff such as controllers who have US GAAP experience. The Big 4 accounting firms, he adds, are doing a good job training a new generation of finance and accounting staff, but it will be some time before they have gained the experience to become high-level managers.

Another market with lots of promise is India. Sanjiv Sachar, managing partner in India for Egon Zender, a recruitment company, says that, with the economy bounding ahead, demand is hot for all types of senior managers no matter what their background. Nonetheless, he notes: “Of all the roles in the executive suite, demand is strongest for the CFO position.”

That demand, he says, is coming from across the spectrum of industry sectors, from domestic consumer-goods companies to international IT services players. Of particular note, though, is the trend for Indian firms to look beyond their borders and expand onto the world stage.

“A lot of companies want to upgrade their finance head and move away from having a traditional accountant to having a CFO who is comfortable handling foreign acquisitions and driving international strategy,” says Sachar. Companies are ramping up their salaries aggressively, he adds, to match the greater demands that the role now carries.

Gorging on governance
In Singapore, salaries are rising by a much more genteel 3% to 5% a year, reports Florence Ng, managing director in the Singapore office of Michael Page, another headhunting company. While that’s little more than the rate of inflation, it marks an improvement on years like 2002 and 2003 when salaries barely rose at all.

Nonetheless, the market has still seen lots of movement, mostly at the middle manager level. “Because of a pyramid effect, recruitment at levels below the CFO has been much more active,” says Ng.

One area in particular, she adds, has been especially busy. “Compliance expertise is in great demand,” she stresses. “The regional arms of Western multinationals as well as the bigger local companies are all strengthening their internal audit teams and their compliance functions.”

That, in turn, has presented big headaches for the Big 4 accounting firms whose legions of auditors are the obvious place to look for talent with compliance, control, and governance skills. “The Big 4 have really struggled to retain staff in the last year,” says Ng. “Auditors being poached for in-house jobs are negotiating pay rises of 10% to 25%.”

Benjamin Goh is a case in point. After graduating with a degree in business, Goh joined Ernst & Young in Singapore in 1997, taking his ACCA qualifications and working as an auditor for the firm’s financial services clients. Then, in mid-November last year, he was poached to join a new control and compliance team for the regional operations of Citigroup Private Bank. The job switch saw his salary rise by 45%. “I was very lucky,” smiles Goh.

The unit he now works for is a four-strong team set up in Singapore to work alongside the private bank’s existing compliance team of ten staff. Goh’s mandate is to review the operational controls and compliance framework for Citigroup Private Bank across Asia Pacific. “Banks in Asia face an increasingly tough compliance regime and Citigroup wants to stay ahead of the game,” he explains.

It’s a similar story in Hong Kong, says Guy Day, managing director of Ambition, a recruitment company that specializes in finance jobs. “Corporate-governance projects have created a lot of new roles for finance staff,” says Day. “Internal audit positions are in particular demand.”

However, just as in Singapore, Day sees most activity in the Hong Kong job market at levels below the CFO. Interestingly, Day reckons the current focus by companies on beefing up their governance structures has helped damp down opportunities for the most senior managers looking to change careers. “The ‘sleep-easy’ factor has become much more important in the CFO selection process, so companies are recruiting internally much more than in the past,” he observes.

Back-office blues?

Needless to say, the push for better governance and compliance has seen companies place stronger emphasis on the accounting and control qualifications of prospective job candidates. It’s a trend that doesn’t bode well for those executives who aspire to become more strategic CFOs and to work increasingly as front-line business partners and advisors rather than as back-office policemen.

But the picture isn’t all doom and gloom for would-be renaissance finance chiefs. Consider the appointment this February of Sandeep Malik as CFO of the Asia operations of Prudential, a UK-based insurer with £16.4 bn-a-year (US$28.9 bn) in premiums written, of which a third comes from Asia. As finance chief in Asia, Malik will also be in charge of strategy and business development for the region.

With a degree in electrical engineering, and an MBA from the Indian Institute of Management in Hyderabad, Malik has no formal accounting qualifications to speak of. For the past 11 years, he has worked at Marakon Associates, a strategy consultancy, setting up the firm’s first office in Asia in Singapore back in 2000. “I’ll need to learn a lot on the accounting and regulatory side,” he concedes, “although I’ll have the help of a full-time finance director reporting to me.”

Nonetheless, argues Malik, in many ways not being an accountant has advantages. “What I bring is an economics-based philosophy to managing the business which is very different to an accounting-based approach. I’ll be trying to embed the mindset, the discipline and the frameworks for managing for intrinsic value.”

As CFO Asia went to press in late January, Malik was still formulating his plan for his first 100 days in office as well as his priorities over the longer-term. “There are a lot of great challenges to the job,” he enthuses. “Financial services in Asia are really taking off now, consumerism is on the rise, people are getting wealthier and the competitive intensity is going up dramatically as more insurers from Europe and the US move into the region. I’ll really be concentrating on building the platform for the business to face this new horizon.”

It’s an exciting prospect, but then again, the whole of Asia presents an exciting future these days. With growth rates the envy of the world, even those CFOs finding it tough to shift jobs should see their existing operations and responsibility expanding, and hopefully their earnings too.