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Compensation costs rise as SCB faces strong competition

If you want to expand your workforce in Asia, be prepared to pay for it.

Just ask Standard Chartered. Its headcount rose 9 per cent last year compared with 2009, while staff expenses grew 17 per cent to US$5,765m, according to its annual report released this week.

These statistics show the firm is starting to fulfill its recent promises to create thousands of new jobs, particularly in Asia. In May last year, for example, it trumpeted 2,000 extra Singapore hires by 2012.

But with staff costs rising even faster than headcount, the figures also mean SCB is paying top dollar to recruit and retain the talent its expansion plans demand. As is also the case with HSBC, a candidate-led job market is forcing firms to be competitive with compensation in Asia, even if they remain conservative in other regions.

As the financial review section of the SCB annual report puts it: “The change in the external environment has also resulted in greater competition for talent necessitating appropriate retention measures in our key markets.”

For “key”, read (among other countries) Singapore and Hong Kong, where employee expenses have increased in both SCB’s wholesale and consumer divisions. Wholesale banking in Singapore, for example, grew in areas such as commodities, options and interest rate derivatives.

Bad bonuses and terrible turnover

Yet despite all the other increases, the bank’s bonus pool only rose “modestly” on 2009 levels. While all employees are entitled to an element of performance-related compensation, bonuses are increasingly concentrated in the hands of top rainmakers, rather than average achievers.

“Typically, the higher the total compensation, the greater the proportion delivered in variable form (either through a cash award, deferred shares and/or performance shares),” says the remuneration section of the report.

Two recruiters with knowledge of the bank say staff retention has been a problem over the past year. While SCB has plenty of newly created jobs in functions such as relationship management, vacancies are also opening up because too many people are leaving prematurely.

What’s compensation really like at SCB? Let us know in the comments box below.

Comments (20)

Comments
  1. banking have been too conservative to recuriting new people, no wonder they pays more for retain! please HR people only do the words matching have little knowledge about the quality of applicants.

  2. this guy (or this website) always says tough talent market..but reality is
    it is still difficult to find a job for job seekers

  3. SCB can pay, higher than the regional & Australian banks in Asia Pacific but not as high as the top banks out there…. BIG caveat is that the expansion is putting considerable stress on the current environment, thus will be messier than one which has grown on a regular pace. Current house structure is struggling to cope with the rapid expansion.

  4. my fren working inside SCB says she regret joining this bank

  5. If this “bonuses are increasingly concentrated in the hands of top rainmakers” becomes a trend, i’m not surprised to see an exodus for support, middle and back back office people. And definitely everyone will be asking for a much higher based pay since they know the banks only want to reward and give bonuses to rainmakers and front office people.

    If banks still dont want to reward these support, middle and back back office people, they will pack their bags and leave the banking industry.
    This will create a vacuum and give banks/regulators/front office people a big headache.

    Like they say “Follow where the money is”.

  6. If the bank is announcing record profits/revenue, yet the bank’s bonus pool only rose “modestly” on 2009 levels, the whole world would know that you are not rewarding and paying your staff well. I’m not surprised that everyone will be poaching your disgrunted performing staff.

  7. HR in any bank has not role and they are most dumb team in any company. frankly I do not think HR is there it is in fact ‘Recruitment team’. these bank HR has not mind that this year inflation in Singapore has been around 5+ % and they have given no pay ? what is the reason ? do they not understand the maths ? they can take help from these smark bankers and Investment anlsysts to determine the trend and pay hike ? these are last few years for banking industry for IT people. looks normal small to medium IT and other industriesa re paying much more that these big white elephant banks. Shame on the senior manage of all these banks in Singapore.. wake up ..!!

  8. SCB is a good place to work & learn. But aggressive business targets plus bad bonuses always lead to brain drain problem, esp in consumer banking.

  9. Perhaps only a small handful has good HR, and even then, such talents are few and rare.

  10. To anyone who has read the SCB related feedback in the past on this forum, it doesn’t take a genius to figure out that the reasons why SCB is notoriously bad at controlling staff costs…(1) they have to pay huge retrenchment payments to perfectly competent staff whenever they “retrench” on their almost annual politically-driven re-organizations (2) staff pay and bonuses are determined by who you know not on your actual competence, qualifications or job performance (3) incompetent new staff hire equally incompetent teams under them so unfortunately no work actually gets done despite the higher staff costs (4) competent people don’t stay because they realize this bank has nothing to teach them that they want to learn and staying too long will damage their market competitiveness. These costs will keep going up as there are only so many local staff a bank can abuse before word gets out (if it hasn’t already) that you are an employer to avoid at all costs.

  11. Many in the Financial Markets in SCB referred to the day after bonuses were revealed to be “Black Friday”.

    Many are leaving SCB – it is a different bank from what it was even five years back. They may have added a lot of people but they are also losing a lot of good people by alienating them – me included.

  12. Some interesting comments on SCB – I can add that the Consumer Bank has had regime change 2 years ago leading to a decline in leadership. Its true that its not the same place it used to be. They are great at presentations and the art of saying but no delivering. People are now aware of this and its a matter of time before another regime has to change.

  13. SCB pays well for their top staff… typically above market.
    Downsize the team through continuous re-structuring…lay-off.
    People at the top have no where to go… given they are paid so well…

  14. Couldn’t agree more with TheInsider. SCB’s new Consumer Bank “leadership” epitomizes what has led to the decline of SCB as an employer. Long on talk, and political assassinations. Short on experience, substance and actual delivery.

  15. Another round of retrenchments has begun. The cycle continues.

  16. Yes, the staff turnover is high.
    But they are still making monies, and record profits year after year.
    Any thoughts?

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