Indonesian Market Survey 2015

Chile - China - Indonesia - Mexico - Malaysia - Philippines - Thailand

RECRUITMENT MARKET REPORT INDONESIA 2015


COMPANY OVERVIEW Monroe Consulting Group is an international award-winning executive search company that delivers the highest standards of professionalism to multinational and national companies in emerging economies around the world. Originally conceived in Australia, the Group opened its first office in Thailand in 2002 and expanded rapidly. It now operates a network of branches throughout Asia and Latin America, employing more than 100 professional consultants who are expert at recruiting in developing markets. Monroes brand is based on the principles of honesty, integrity and customer satisfaction through its commitment to excellence in executive search. The Company prides itself on its ability to recruit, develop and retain the best and brightest talent in the recruitment industry. Each and every Monroe employee is trained to specialise in providing end-to-end recruitment services for middle- to senior-level executives within defined sectors. Monroe Consulting Group provides a selection of recruitment services that can be tailored to the specific requirements of its customers in a range of contexts. Clients can opt for either a database search or an executive search (headhunting) recruitment service, both of which are offered on success-based fee structures. It is Monroes ability to talent map, locate and recruit the finest candidates for its clients that sets the Company apart from its competitors.

Indonesia Gedung Sovereign Plaza, 16th Floor Jalan TB. Simatupang Kav. 36 Cilandak Jakarta, 12430 E: [email protected]

Thailand 209 K Tower, 23rd Floor, Tower B Sukhumvit 21 (Asoke) Klongtoey Nua, Wattana Bangkok, 10110 E: [email protected]

Philippines 2108 Trade and Financial Center Cnr. of 7th & 32nd Street BGC, Manila, 1634 E: [email protected]

Malaysia The Gardens North Tower Mid Valley City Lingkaran Syed Putra Kuala Lumpur, 59200 E: [email protected]

China 26F, Lippo Plaza No.222 Middle Huaihai Road

Huangpu, Shanghai, 200021 E: [email protected]

Chile Alcantara 200, piso 6 Las Condes Santiago E: [email protected]

Mexico Insurgentes Sur 1796 4to Piso Col. Floridar Mexico D.F, 01050 E: [email protected]


REPORT BACKGROUND Indonesia experienced a slight slowdown in economic growth in 2014 to 5%, which was the fourth consecutive year of GDP deceleration. However, both the Asian Development Bank (ADB) and World Bank forecast that Indonesia will bounce back to 6% growth in the next two years, largely driven by domestic consumption. Foreign direct investment (FDI) growth, however, remains sluggish, with the Investment Coordinating Board (BKPM) admitting in mid-March that it had been forced to cancel US$23 billion worth of foreign investment between 2007 and 2012 because of bureaucratic obstacles. Given the positivity surrounding the political and economic situation in Indonesia, the recruitment market remains highly competitive for companies seeking to employ skilled professionals. While Indonesia has the worlds fourth largest available workforce of 117 million people, the general level of education is below the level required to meet the demands of Indonesian employers. The cause of the shortfall in availability can be directly attributed to the education challenges faced by Indonesia. The current standards at the secondary and tertiary level are well below global standards. According to the results of the 2012 Program for International Student Assessment (PISA), 15-year-olds in Indonesia were rated 64th out of 65 countries in mathematics, science and reading. Indonesian universities have also performed poorly in international university rankings. The Times Higher Education did not list any Indonesian universities among its top 400 global universities or top 100 Asian universities in 2014. The QS World Ranking listed the University of Indonesia (UI), Bandung Institute of Technology (ITB) and Gadjah Mada University (UGM) in 310, 461 and 551 places in the world respectively. Matters are made worse as the few people coming through Indonesias top universities or with degrees gained overseas are not all moving into the corporate sector. Some of Indonesias best and brightest look to secure work overseas and many more join family-owned businesses. This report has been written to help employers and employees understand some of the key influencing factors of the Indonesian recruitment market, specifically for managerial-level skilled professionals. The Candidate Survey, involving 500 job candidates, was conducted via an online questionnaire and the respondents were restricted to only managerial people who currently have a monthly salary of more than US$1,500 per month. The Employer Survey was gathered from 50 multinational and national companies operating in Indonesia and was restricted to only those people who were involved in the hiring process at a Director level or within Human Resources.


CANDIDATE SURVEY INDONESIA 2015


SURVEY DEMOGRAPHICS

Gender Industry Sector

Age Group Education Level

Number of Years Work Experience Current Employer

Male84%

Female16%

Consumer Goods25%

Professional Services

24%

Industrial30%

Technology12%

Health9%

25 292%

30 3413%

35 3935%

40 4432%

45 5418%

Post-Graduation/ Master's

degree36%

Graduation/ Bachelor's

degree62%

Diploma or below

2%

0-51%

6-1011%

11-1541%

16-2028%

20+19%

Local36%

Multinational64%


Current Job Function

Current Career Level

14%15%

12% 12%

0%

13%

7%

1%

6%

2%

17%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2%

20%

50%

29%

0%

10%

20%

30%

40%

50%

60%

CEO Director Senior Manager Manager


COMPENSATION & BENEFITS

As companies attempt to attract and retain people, the income of Indonesian professionals has increased at a higher rate than entry- and staff-level positions. Monroe has seen a higher number of professionals earning between $3,000 and $5,000 per month (28%) compared to last year where 25% fell in to this category. On the face of it this seems like an insignificant shift, but the Indonesian rupiah devalued by 20% against the US dollar since the last survey and the increase is greater than these numbers suggest at first sight.

There was a noticeable reduction in salary increases given in 2014 when compared to 2013. The majority of Indonesian professionals (46%) received between 6% and 10% salary increases last year, which is comparable to 2013, where 49% received the same level of increase. The difference comes outside of this band with 14% of Indonesian professionals not receiving any increase in salary, compared to the previous year when less than 1% didnt receive an increase. There was also a reduction in the number of people who received increases of between 11% and 15% where 36% of respondents in 2013 received this level of increase, compared to just 17% in 2014.

2014 Increase Anticipated Basic Salary in 2015

0%14%

1-5%17%

6-10%46%11-15%

17%

16-20%3%

21-25%4%

26-30%1%

>40%1% 0-5%

3%

1-5%8%

6-10%34%

11-15%27%

16-20%16%

21-25%8%

26-35%4%

Above 40%1%

0%

5%

10%

15%

20%

25%

30%

Gross Monthly Basic Salary


Although the salary increases received last year were less than the previous year, Indonesian professionals remain positive with 30% of respondents expecting to receive more than a 20% salary increase and a further 20% anticipating between 11% and 15% increases from their current employer.

Companies in Indonesia are offering a wide range of benefits with private medical insurance, communication allowances and company car or car-ownership programs being the most common. Surprisingly, given the traffic problems in most cities, a relatively low number of respondents (26%) had access to flexible working hours, which is lower than other emerging Southeast Asian countries where 51% of respondents had access to flexible working hours.

1%

6%

23%

20% 20%

8%10%

6%

2%

4%

0%

5%

10%

15%

20%

25%

COMPANY PERFORMANCE PAY 2015

86%

52%

66% 66%

54%50%

12%

26%

0%10%20%30%40%50%60%70%80%90%

100%

BENEFITS FROM CURRENT EMPLOYER


2%

44%

29%

14%

3% 5% 4%

0%

10%

20%

30%

40%

50%

TOTAL ANNUAL HOLIDAYS

Employers are also offering increased annual leave. While the standard Indonesian offering is 12 days annual leave, 26% of respondents indicated they enjoyed more than 16 days annual leave from their current employers.

CAREER ADVANCEMENT Indonesian employers are promoting their skilled professionals at a more rapid rate that other emerging Southeast Asian nations, with 31% of respondents having received a promotion within the previous 12 months. This compared to just 21% of respondents in other Southeast Asian countries.

Indonesian employers are promoting people quickly because there are not enough people with the right experience and skill sets to meet the current demands of the market. Companies are having to promote people on their potential to grow in to the new position, rather than waiting until they have developed the experience and skills. Another factor to consider why Indonesian professionals are being promoted at a quicker rate than their neighbours is that many companies are using promotions as a tool to retain the people they have already invested in.

Promoted by employer in the past 12 months

No69%

Yes31%


While employees are enjoying career growth, it is worth noting that the increases in compensation and benefits that come with these promotions are below that level that Indonesian professionals could earn if they switched positions with another employer. Out the people who had received a promotion in the past 12 months, 70% of respondents said they had received a salary increase that was below 20%. The highest number of respondents stated a salary increase of between 6 and 10 percent, which is in line with annual salary increases most companies are offering without promotion.

CONSIDERATIONS WHEN CHANGING EMPLOYERS Fixed monthly salary is still the main consideration of professionals considering changing employers. Other major influencing factors are the companys reputation, future career opportunities and the quality of the management team.

3.12

4.97 5.015.35 5.63

6.31 6.41 6.497.24

7.58 7.87

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Salary increase received when promoted

0%1%

1-5%6%

6-10%23%11-15%

20%

16-20%20%

21-25%8%

26-30%10%

31-35%6%

26-40%2% >40%

4%


When it comes to money, Indonesian professionals set their sights high, with 45% of respondents indicating an expectation of a more than 30% increase in salaries when changing jobs. This is significantly above Thailand, Malaysia and the Philippines where 26% of respondents indicated an expectation of a more than 30% increase. The highest number of Indonesian professionals indicated an expectation of between 21% and 30% increases, which is in line with what most companies are currently offering people to change employers. Companies seeking to secure the best talent in the market should consider how they conduct the recruitment process with people being interviewed. In order to create the most positive impact on Indonesian professionals, companies should be highly transparent in sharing information on the company, the position, the challenges faced and the results they are expecting from the person in the position. This is because 53% of respondents said that this was most likely to create a positive impression of the company. Companies should also be aware that the risk of creating a negative impression is evenly spread amongst companies having a slow recruitment process (24%), a lack of transparency (24%), poor communication (22%) and bad chemistry with the people conducting the interviews (21%).

Salary expectation when changing job

Creates a positive impression Creates a negative impression

0 - 10%6%

11-20%19%

21-30%30%

31-40%26%

41-50%10%

51-60%5%

81-90%1% 91-100%

1%

>100%2%

Transparency53%

Speed12%

Environment4%

Communication19%

Chemistry12%

Lack of transparency

24%

Slow process24%Uncomfortable

environment9%

Poor communication

22%

Bad Chemistry21%


There is also a high risk of candidates accepting a counteroffer from their current employers, with 29% of respondents saying they had resigned from their employer, only to end up accepting a counteroffer. The vast majority (67%) of successful counteroffers came in the form of a promotion and more money. Twenty-two percent said this was because they were offered more money to stay. Interestingly, only 8% of Indonesian professionals accepted a counteroffer because of feelings of guilt, which is substantially lower the other emerging Southeast Asian countries that showed 30% of successful counteroffers were because of feelings of guilt about leaving their company and colleagues.

Employers and employees considering the benefits of counteroffers should proceed with caution as 44% of people who accepted a counteroffer left the company within the next 12 months, with 31% failing to last just 6 months.

Acceptance of a counter offer

Reason for accepting Length of employment after accepting

Yes29%

No71%

More money offered

22%Promotion and more

money offered67%

Feel guilty8%

Negative Information

3%

0-6 months31%

7-12 months

13%13-18

months10%

19-24 months

10%

> 2 years36%


JOB MARKET INDICATORS The skilled professional job market is still strong in Indonesia, although 2014 saw a slight slowdown in the number of people changing employers. 2014 saw 21% of skilled professionals change employers in the previous 12 months, which is down on the previous year which was 26%. This number is also below significantly the below the neighbouring Southeast Asian markets of Malaysia, Philippines and Thailand, where 30% of respondents had changed employers in the previous year.

Although there are early signs that the recruitment market has the potential to cool slightly, there is still a shortage of skilled professionals available to meet the demands of companies in Indonesia. As an indicator of how competitive the current job market is, 93% of respondents said that had been approached and asked to consider a change of employment in the previous 6 months, with 34% of professionals saying they had been called more than 5 times in the past 6 months.

With an abundance of jobs available for senior skilled professionals, companies must be proactive in the way they recruit. 70% of respondents found their current positions by being headhunted by a professional recruitment company, previous colleague or directly by the company itself.

7%

60%

21%

7%3% 3%

0%

10%

20%

30%

40%

50%

60%

70%

None 1 5 times 5 10 times 10 15 times 15 20 times Over 20 times

HEADHUNTING CALLS GRAPH

21%

32%

25%

14%

8%

0%

5%

10%

15%

20%

25%

30%

35%

< 1 year 1-2 years 3-4 years 5-10 years > 10 years

LENGTH SERVED IN THE POSITION


Companies looking to tap into the passive candidate market would do well to partner with a professional executive search company as 75% of respondents surveyed said they use headhunting companies to search for new positions. In second place as methods to search for a new position was LinkedIn with 69% of respondents having used it to search for a new job, which beat Indonesias two leading job boards Jobstreet and JobsDB. The competition to secure talent has seen a new trend developing where companies are extending employees notice periods. In recent years there has been an increase in the number of employees who are tied in to notice periods beyond the standard 1 month, with 16% of respondents indicating a 2 month notice and 13% being on 3 months notice.

Mid- to senior-level employees are aware their skills are in demand and remain very positive about the availability of jobs, with 47% of respondents rating the current job market as strong and 14% saying they rated the market as very strong.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Executive Search Firm

LinkedIn JobStreet JobsDB Personal Contacts

Newspaper Monster Other CareerJet

Methods used to search for new job

Current notice period Job market feeling

1 month71%

2 months16%

3 months13%

Very Strong14%

Strong47%

Moderate33%

Weak6%


EMPLOYER SURVEY INDONESIA 2015


SURVEY DEMOGRAPHICS Information from employers was collected by conducting the survey with senior Human Resources and Director-level employees who are responsible for recruiting new employees.

HIRING TRENDS Although almost half the employers surveyed had increased their number of employees during 2014, the level of growth did not meet anticipated levels. In last years survey, 30% of companies expected to undergo significant increases in employee growth, when in fact just 19% of employers said they had achieved that level during 2014. A similar trend can be seen for employers who anticipated a slight increase in employee growth with the figures being 51% for anticipated and 39% for actual. Further signs of cooling of the recent hiring volumes are also noticeable when comparing this same figure to 2013 actual hiring activity where 27% achieved a level of significant employee growth. Similar declines can be seen with the number of employers indicating a slight increase in employee headcount with it dropping from 52% to 39%. An increased number of employers (26%) responded that they had no change in headcount, which was up on the previous year which was only 8% of employers. Although recent hiring may not have reached previous levels, employers still remain positive with 65% predicting a slight increase and 12% a significant increase.

Position Industry Company

HR58%

Director, VP, Head of Dept.26%

Manager 16%

Professional Services

37%

Consumer Goods26%

Industrial26%

Technology11%

Multinational58%

Local42%


Overall the numbers being seen in Indonesian suggest the recruitment market is moving from an overheated period to a more stable one as companies look to consolidate recent employee growth and assess their employees performance and productivity before undergoing further growth.

HIRING CHALLENGES When asked to rank where employers felt they had the most success in finding new employees, recruitment/headhunting companies came out as the best source for new employees followed by internal referrals and Internet advertising. Recruitment companies ranking as the most effective method of finding professional level employees show the growing influence of executive search companies in Indonesia, as they ranked only 3rd in our 2014 survey.

4.58

3.773.60

3.212.98 2.86

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Executive search Employee referrals Internet advertising Social media Corporate website Print advertising

Most effective method of hiring professionals

Hiring Activity 2014 Estimated hiring activity 2015

Significantdecrease

2%

Slight decrease14%

No change26%

Slight increase

39%

Significant increase19%

Slight decrease5%

No change19%

Slight increase64%

Significant increase

12%


The companies surveyed said that the more senior the position they were recruiting for, the greater the challenges. By far the biggest shortage of available people is in the senior management category with 39% of employers stating that they found this extremely challenging, 49% as very challenging and 12% as slightly challenging to recruit at this level.

The difficulty involved in finding talent within specific job functions showed the biggest challenges are faced when searching for Sales and Marketing professionals, with 23% saying they found it extremely challenging and 47% as very challenging to recruit in this area. The second hardest function to recruit for were for technical positions, followed by Human Resources.

3.523.30

2.47

1.72

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Senior Management Middle Management Staff Level Fresh Graduates

3.53

2.982.83 2.79

2.64

2.21 2.12

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Sales & Marketing Technical Human Resources Production Supply Chain Accounting Administration


HIRING CRITERIA Companies assessing candidates in the recruitment process stated that displaying overconfidence or arrogance was most likely to create a negative impression of the person being interviewed. This was closely followed by candidates who were unable to provide clear answers to questions or had unrealistic salary demands. It is interesting to note the rise of arrogance and unrealistic salary demands as last year they ranked in 4th and 5th places respectively. The rise can be attributed to the building frustrations that many employers in Indonesia feel with the financial demands and behaviours that can sometimes border on the mercenary of many senior level people exploring new job opportunities.

4.33

4.35

4.51

5.16

5.30

5.33

5.93

6.02

6.74

7.33

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00

Informal tone used

Inappropriately dressed

Delayed responses to email / SMS / Calls

Candidate late for interview

Lack of confidence

Candidate hasnt prepared for the interview

Candidate changes jobs regularly

Unrealistic salary demands

Unable to provide clear, precise answers

Over confidence / arrogance

Most likely to create a negative impression of a candidate


Companies overwhelmingly ranked integrity as the most desirable soft skill a candidate could display, with a score of 6.35 out of 8. Leadership and demonstrating commitment also scored well with scores of 4.81 and 4.74 respectively.

As well as Integrity, employers also felt people who had gained knowledge outside of Indonesia were desirable with 42% of respondents saying that they valued people with overseas education or experience and were willing to pay a premium salary to hire people, and 40% indicating they valued it but were not willing to pay a premium salary.

0.00

1.00

2.00

3.00

4.00

5.00

6.00

We value people with overseas education or experience and are willing to pay a premium salary

42%

We value people with overseas education or experience but are not

willing to pay a premium salary39%

We do not see any additional value in people with overseas education or experience

19%


COMPENSATION & BENEFITS Most employers in Indonesia issued between 6% and 10% average salary increases to their employees in 2014 and a further 30% gave increases of between 11% and 15%. Although the figures remained fairly consistent with last year, there was an increase in the number of employers who indicated they had given an increase of more than 15%, with 16% percent of employers falling in to this category, compared to just 10% in the previous year. A similar trend is anticipated in 2015.

In addition to annual salary increases, many employers are expanding their benefits in order to try and help retain employees. Medical insurance and performance bonuses are becoming standard elements of an employers benefits package. Growing in popularity are company cars and car ownership schemes with 72% of employers now offering this benefit, compared to 54% in the previous year. Although employers are still being pressurized to increase salaries and offer a wide variety of other benefits, employers in Indonesia are increasingly confident that they are seeing value for money as 79% of respondents said they felt the salary expectations of skilled professionals was reasonable. This was a substantial increase on the previous year where only 49% ranked expectations as reasonable.

Actual increase 2014 Anticipated increase 2015

No Increase5%

1% - 5%14%

6% - 10%35%

11% - 15%30%

16% - 20%9%

21% - 25%5%

26% - 30%2%

No Increase7% 1% - 5%

12%

6% - 10%39%

11% - 15%26%

16% - 20%12%

21% - 25%2%

26% - 30%2%


Benifits available to employees

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Very low Somewhat low Reasonable Somewhat high Very High

Opinion on current salary demands

Indonesian Market Survey 2015

Documents

Transcript of Indonesian Market Survey 2015