Despite a shortage of qualified executives in the consumer goods sector in Indonesia, human resources professionals say leading multinational and national companies are refusing to offer large salary increases to new employees. And in addition, consumer goods companies are less likely to negotiate over the salary demands of candidates, instead preferring to place people who were motivated by factors other than money.
Andreas Saputra, a recruitment consultant who leads Monroe Indonesia’s Consumer Goods Division, said candidates in the sector still maintained “unrealistic expectations” that if they changed employers they would receive increases in their monthly take-home salaries of 30 percent or above.
“We work with many of the most respected multinational and national consumer goods companies operating in Indonesia today and we know that they are no longer issuing offers that are at that level as they are now far more cautious and conservative,” Andreas said. “There hasn’t been a single offer made this year above 25 percent with most companies offering increases of between 10 and 20 percent.”
Intan Nurmaya, head of human resources at a leading multinational consumer goods company with extensive operations in Indonesia, said salary expectations in the fast-moving consumer goods[FMCG] industry had risen sharply in the last four years, particularly when candidates were changing employers.
Intan said the reasons for increased salary expectations were that qualified candidates believed they had unique skill sets in the Indonesian candidate marketplace. “The second thing is that when candidates are changing jobs, they are considering this as a promotion that automatically comes with a large salary increase,” she said.
Intan, who has been in human resources in the consumer goods sector for 16 years, primarily with multinational companies, said candidates who were changing employers believed they would receive salary increases of “at least 30 percent or more” in their monthly salaries, not including other benefits.
She said that in rare cases, some top-shelf senior executives may be able to command such increases, but that was no longer the case for the majority of placements, with consumer goods companies now only prepared to offer increases of around 10 percent to 20 percent at the most. “Now, we have more options [with candidates], which means that we have the back-ups to source talent, so this increases our bargaining power.”
Intan said human resources managers in many companies were also now having a much greater influence over other executives in the hiring process and were less flexible when it came to approving large salary increases. “The understanding from [other executives] is now much better: they understand that although a candidate profile may appear optimal, the salary demands will impact on the profit and loss of their respective departments.
Human resources executives were also becoming less tolerant with protracted negotiation processes and were now generally putting their best offers on the table immediately. “In the beginning, I always tell the candidates, we are not going to bargain: I am open about this from the beginning,” she said. “It is clear that we won’t be going back and forth because we don’t want to waste our time.”
Intan offered advice for job candidates. “From a candidate’s perspective, it would be very insightful if they looked at exactly where they were in their career,” she said. “Sometimes when we are in the position of hiring, the candidates really think that we need them or want them but now that has changed.”
Nitya Nirmala, a regional recruitment specialist at PT PZ Cussons Indonesia, agreed with Intan, saying the bargaining power was now firmly behind company recruiters and human resources executives.
“Perhaps the current generation are obsessed with the salary, the money, but [my advice] is that they should have the patience to join a company that has a more conducive environment,” Nitya said. “My advice is that candidates sit down with their potential new employers and have a two-way conversation. The candidates also need to listen about the company: how it operates, the work environment, the culture. Is this a company they can be happy with? We now make it very clear from the beginning that it’s not about the price. It’s not about the money.”
She said recruitment companies such as Monroe Consulting Group that specialised in recruiting executive candidates in emerging economies such as Indonesia, Thailand, the Philippines and Malaysia could also play an important role in managing candidate salary expectations.
“It is about time constraints and the scarcity of professional executives in the marketplace when I decide to seek support from executive search companies,” Nitya said. “Monroe are very clear about how much we will pay and know that we want to be sure about the motivation [of the candidates] because if they are only testing the waters then it’s wasting our time.”
Andreas said there was a “disconnect between employer and candidate expectations as to what constituted a reasonable salary increase.” “Companies are being a lot more conservative with their offers than in previous years, probably because they want to make sure they have people joining them for the right motivations instead of it just being a money move,” he said, “but the candidates still assume that offers of 30 percent or above are achievable. This is not the case.”
He said another area that was “very frustrating” was that job candidates were not considering the entire salary package, which included not only the basic monthly salary, but also performance bonuses and tangible and intangible benefits. “All many care about is how much money they can make on a monthly basis.”
“At Monroe Consulting Group, we are consistently trying to educate the market, including candidates that believe that cash is the only major consideration when choosing a job,” Andreas said. “They also need to explore more fully other intangible benefits they will receive from any new company, including training opportunities and the prospects of career advancement.”