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International companies spend twice as much on their employees as their Russian colleagues

International companies spend twice as much on th...

KPMG has issued a report on the results of its latest benchmark study on HR management systems 2010.


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KPMG, an international network of firms providing Audit, Tax and Advisory services, has published the results of its latest benchmark study on HR management systems 2010, in which HR Department representatives from Russian companies and international organizations working in Russia took part.

The survey revealed that in foreign companies payroll costs were lower than in Russian ones, but benefits’ costs were higher.

Personnel costs per employee in foreign companies were more than two times higher than in Russian companies and revenue per employee in foreign companies was 1.8 times higher than the same figures for Russian companies. Furthermore, the HR ROI (return on investments) in foreign companies was found to be significantly higher, than in Russian companies.

The most common cause of turnover in 2010 was dissatisfaction over salary level. The second most common cause of turnover was personal reasons (HR Benchmarking-2009 results revealed “career and professional growth” as the second most common cause). Other reasons were intention to change scope of activity, location of the office and lack of communication (for example, conflict with the management).

In Russian companies the most popular voluntary turnover cause was dissatisfaction over salary level; and in foreign companies, personal reasons.

The majority of HR Benchmarking participants used external HR services in 2010. The external HR providers were primarily used for recruitment, learning and development and payroll. The overall costs of HR services providers were no more than 2% of total personnel costs.

Almost all the respondents (87%) increased salaries in 2010. The average number of employees whose salaries were increased was 100% for top management, production workers and support staff, 95% for sales specialists and 90% for middle management and specialists. The average rate of increase was 10-12% for the different categories and function areas.

Most of the participants (70%) reviewed salaries on an annual basis; 83% of them reviewed salaries according to a company plan for all employees. The most common criteria for salary review in 2010 were the market salary level for certain positions and individual performance results.

More than 80% of HR Benchmarking participants plan to increase salaries by 8-10% in 2011.

The most widespread benefit in 2010 was mobile phone compensation, provided to top and middle management. Other widespread benefits included health insurance (87% of participants), welfare assistance (70% of participants), corporate cars (65% of participants) and life insurance (57% of participants). 39% of the companies provided sick leave compensation beyond statutory requirements, and 35% provided maternity leave compensation beyond statutory requirements. Other benefits named by the participants included health insurance for close relatives, compensation for private car usage for business, parking spots, free company products and use of swimming pools/gyms.

A separate part of the survey was devoted to the special development programs, particularly succession and talent pools. Among survey participants succession pool programs were more popular than talent pool programs (48% of survey participants had succession pool programs and only 22% had talent pool).

Employees undergoing training in 2010 made up about 56% of the average headcount. In this respect the leading sector was Pharmaceuticals and Medical products, where 84% employees were trained.

It is interesting to compare in-house training costs (including salaries of L&D employees and costs of supporting materials for conducting trainings) and external training costs for each employee: costs of in-house training per each employee was significantly lower than costs of external training (on average RUB5 200 and RUB17 578 respectively, in a year). But when comparing these costs we should consider the fact that external trainings are usually held only for a certain number of employees (35%) for compulsory education or in those cases where internal trainings would have been impossible or inadequate.

Notably, foreign companies the number of promoted employees was about 8%; in Russian companies, less than 1%.

Programs to develop companies’ images have lately become an important aspect of a company’s corporate policy. According to HR Benchmarking results, 83% of participants practiced sponsorship and/or charity, and 52% used employer branding programs in 2010. About 74% of companies regularly conducted employee satisfaction surveys, while 22% conducted it once a year.

According to Alevtina Borisova, Head of People Services at KPMG in Russia and the CIS, the survey results show that there remains a large gap between Russian and international companies in terms of HR management. "Benchmarking allows you to compare how your own HR service operates with how other similar services operate. In addition, given that the range of HR service performance indicators is limited, this comparison may help when compiling the HR budget, and may enable a better understanding of current personnel management best practices," she added.

© 2021 KPMG refers  JSC “KPMG”, “KPMG Tax and Advisory” LLC, companies incorporated under the Laws of the Russian Federation, and KPMG Limited, a company incorporated under The Companies (Guernsey) Law, as amended in 2008, member firms of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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