SELLER’S MARKET
Finance salaries across the region are rising, according to this year’s CFO Asia salary survey. That’s not necessarily good news for CFOs.
By Don Durfee

To understand the topsy-turvy market for finance talent in Asia these days, consider James Wu, a planning manager for US restaurant chain Burger King in Shanghai. In July 2005, he landed at the US fast-food giant with a 30% pay increase over his previous job at the China operations of Chubb, a US-based insurance company.

“I was getting a lot of calls,” he says. “I interviewed with many companies and got three offers.” He chose his current employer because the company’s growth plans promised better career prospects, and he liked its global reach. Burger King had just moved its Asian headquarters from Singapore to Shanghai. Convinced that Chinese consumers will succumb to the allure of its flame-broiled fast food, it plans to open restaurants across China in 2007.

Wu had natural advantages. He speaks English, and has experience with US accounting rules. In addition to Chubb, he had worked for other major companies, including Pillsbury and PricewaterhouseCoopers. He has a degree from Xiamen University. He epitomizes the kind of mid-level finance manager that Asian employers – both local and multinational – are falling over themselves to hire.

In fact, just as the hot sellers’ market for CFOs is peaking, another has been emerging for second-tier finance staff. That’s great news for controllers, in-house audit professionals and planners like Wu, who benefit from higher pay and, often, greater job responsibility and a boost up the ladder earlier in their career. But it’s a headache for their CFO bosses. Finding and keeping staff to ensure compliance, prepare financials, and support the business is more difficult than ever.

“It’s become hard to find good people,” laments Enrico Nora, CFO of interTouch, a Singapore-based unit of NTT DoCoMo that provides broadband internet connections to hotels. “And when you do find them, it’s tough to keep them.”

Ironically enough, Wu now finds himself in the same spot. To support Burger King’s expansion plans, he’s helping hire new finance staff. “We need to hire people for every area, but especially in finance,” he says. “And it’s turning out to be quite difficult to find candidates who meet our needs – particularly those who have exposure to the region and speak English.”

Time for a raise?

CFOs aren’t doing badly, either. CFO Asia’s annual pay survey shows that total expected compensation – defined as base salary plus bonuses, benefits, and full-value stock awards – is still climbing for most top finance executives. For example, Asian CFOs who have revenue responsibility of under US$10m saw an increase in pay from US$99,000 to US$107,000, an 8% rise.

But if Asia’s rising tide is lifting all boats, those occupied by mid-level finance execs are generally rising faster than those captained by CFOs. Controllers and internal audit professionals who work with under US$10m saw their salaries grow 33% last year, from US$58,000 to US$77,000.

True, that salary growth hasn’t been even. Controllers who look after US$100m, for example, saw only a slight increase, from US$108,000 to US$110,000. But the overall trend is swiftly upward, especially for those at the lower end of the pay scale. (Although the survey also shows falling pay for the CFOs and controllers who manage the most money, that likely reflects a change in methodology: this year we asked respondents not to include hard-to-estimate stock option values. Executives with the biggest responsibility tend to receive the most options.)

CFOs and recruiters across Asia also report double-digit pay increases for lower- and mid-tier finance positions. “There is a vast amount of hiring in the marketplace,” says Guy Day, managing director of Ambition, a recruiting firm specializing in financial talent. “We see most of the activity at the financial controller level and below.” He adds that finance staff can typically negotiate raises of about 10% when switching jobs.

This year’s pay survey generated a strong response: over 900 completed questionnaires from finance executives across many industries and in countries throughout Asia. Actual salary levels vary widely. The highest-paying markets for CFOs are still found in Hong Kong, South Korea, China, and Singapore; in Hong Kong, the average CFO pulls in US$248,000 per year. Pay is lower in countries such as India and Malaysia, where top finance executives earn US$73,000 and US$137,000, respectively (of course, the differences are smaller when you consider the purchasing power of a dollar in India versus in Hong Kong).

The big change has come at the junior levels, two tiers below the CFO. This is a shift from just a few years ago, when pay levels were stagnant and career opportunities seemed meager. Recruiters say that today’s job market – which features junior candidates job hopping and making extraordinary demands of prospective employees – bears a striking resemblance to the frothiest years of the internet boom. “Demand hasn’t been this robust since 2000, at least,” says Florence Ng, managing director for recruiter Michael Page in Singapore. “It’s becoming hard to manage candidates’ expectations.” For example, it’s not uncommon to see relatively inexperienced candidates asking not just for high pay, but also a chance to manage regional finance operations.

Prepare to pay

Asia’s booming economy is one reason for the surging demand. Last year, China’s economy steamed ahead at a pace of 10.4% and India’s grew 9.2%. Few Asian CFOs expect that growth rate to flag – according to the latest Duke University/CFO magazine Business Outlook Survey, finance executives are resolutely optimistic about the region’s growth.

The characteristics of the boom vary by country. In India, for example, new businesses are forming almost daily and existing companies are hatching plans for international expansion. Both require experienced CFOs at the helm and a horde of accountants to keep the operation running, says Sanjiv Sachar, with recruiting firm Egon Zender in India. That creates headaches for the area’s more established employers. “All of these new companies like to poach finance talent from us,” says Amrut Palan, SVP of finance for HSBC in Mumbai.

In Singapore the hiring binge is a byproduct of the island state’s success in drawing global financial services firms to set up back-office operations there. Credit Suisse, Royal Bank of Scotland, and Merrill Lynch are all boosting their Singapore pre-sence, contributing to what Ng of Michael Page estimates is a near tripling of demand for finance talent.

Then there’s China, now the epicenter of most MNCs’ Asian growth plans. Accordingly, many of these companies are uprooting their existing regional offices and planting them instead in cities like Shanghai and Beijing. That, of course, puts them in direct contention with China’s own booming enterprises, which are also vying for the same small pool of experienced CFOs, controllers, and finance managers.

Asia’s growing attention to corporate governance also contributes to the tightening market. Companies that once had a ro-ving internal audit professional are increasingly putting permanent staff in their Asian offices. Others are splitting off regulatory compliance from the controller’s duties and creating whole new departments devoted to the task. And Asian companies who have listed in the US have had to cope with the same costly and time-consu-ming governance requirements as their American counterparts.

That’s the case for AsiaInfo, a Beijing-based software provider that is listed on Nasdaq. CFO Eileen Chu says that China faces a severe shortage of candidates who know US GAAP, have experience with Sarbanes-Oxley compliance, and speak English. “They’re hard to find and they are expensive,” says Chu, who adds that she is paying 10-20% more for such talents than she did last year.

CFOs also struggle to attract candidates who can think broadly about business issues. Such traits are in demand at interTouch, which is expanding its business into new markets in Asia, Europe, and North America. “As the IT market grows more competitive, there’s a burden on finance to support the business with a creative approach to M&A, cash allocation, and investment,” says Nora. “But if you want someone who can take on a more analy-tical, managerial role, you have to fight more to get them.”

Given the lack of such candidates, many companies are trying to lure away their external auditors and put them directly into non-audit jobs, such as finance manager or controller positions. Such a move can be risky, however. “Many of these auditors haven’t managed an accounting team before,” says Ng. “Some do it well and some don’t.”

In any event, it’s getting harder to steal your auditor’s emplo-yees. The Big Four passed out big raises last year, and some have even granted rare mid-year increases – both steps that have helped stanch the loss of talent. That, of course, only increases pressure on corporate CFOs.

In response, companies are handing out raises of their own and making counter-offers. Palan of HSBC says his company recently increased finance employee pay by 20-25%. Employers are also offering retention bonuses. Our survey shows that 19% of Asian CFOs have received (or will receive) such bonuses this year. A remarkable 28% of controllers will receive one.

More than money

Enrico Nora argues that while such steps are necessary – interTouch adjusted its own finance pay levels recently – they are insufficient. “In interviews I’m hearing many more questions about what the candidate is going to learn and where they can go next,” he says. His response has been to offer more job rotation for finance staff than in the past. “We’re essentially a fast-growing SME; we can’t pretend to offer a stable career path, but we can offer a lot of variety.” After a new hire has worked in a job for a year, she can try out another role, perhaps in compliance, pricing, or taxation. The program’s benefits go beyond retention. By putting new employees into different jobs, Nora has the chance to see who his high-potential staff members are and find what roles best suit each employee.

Indeed, employers large enough to offer greater career opportunities are at an advantage in today’s market. Amrut Palan says that HSBC’s global reach means that it can offer high-potential employees their choice of training programs. “We conciously focus on training, which has helped us get some of the best talent,” he says. “Job candidates are looking not just for good compensation but the right sort of job environment and job content. They are people who want to be updated with the latest developments in their fields, and we’re able to offer them specialist training. Of course, the brand name HSBC also helps with our recruiting.”

Eileen Chu is also experimenting with ways to keep her best workers. In her case, it’s a matter of offering a more open and flexible work environment than finance workers typically find in Chinese companies. Some steps are straightforward: for example, after a grueling quarterly close that involves unpaid overtime, she lets her staff take additional paid time off over the following weeks.

Other steps are more subtle, such as extending greater trust to her employees. She allows AsiaInfo’s treasurer, for instance, to choose investments for the company’s cash without seeking approval, as long as the investments meet certain guidelines (such as AAA-rated fixed-income instruments only). “These are experienced finance professionals,” she says. “There’s no reason not to give them some leeway – if they aren’t performing well, that will be clear after a quarter.”

As the top finance executives in their organizations, CFOs see both sides of the job market: the nuisance of employee turnover on one side and the temptation of a bigger paycheck from other organizations on the other. Some ambivalence is understandable. Even as Chu struggles to recruit new hires and keep the ones she has, she fields weekly phone calls from headhunters. She’s not interested, she says, stressing the loyalty she feels toward her current employer. “But,” she adds after a pause, “if the market continues to be so good, you never know.”