Start-Ups in Singapore Pay Less Than Their U.S. Counterparts: Aon

• The base salary at start-ups in
  Singapore is 12% lower than the U.S. across Managerial levels and 32% lower
  across Professional individual contributor roles.
• Start-ups pay 6% more at the
  Professional individual contributor level in comparison to all companies in the
  General industry as well as the broader Tech industry within Singapore.

SINGAPORE – Media OutReach – 16 June 2021 – Aon plc (NYSE: AON), a leading
global professional services firm providing a broad range of risk, retirement
and health solutions, has
released the results of Aon’s 2021 Private Market Compensation survey. The study, a first of its kind in Southeast
Asia, focuses on critical compensation data to help organisations create a
compelling compensation package that can differentiate an employer from the
competition and aid in scalable hiring plans.

Base salary
trends change at higher levels for Singapore start-ups

The study found that base salaries at
Singapore start-ups pay more (6%) than those in the broader Technology (Tech) and
General industries, across Professional individual contributor levels.

 

The playing field levels out at
Managerial levels, with start-ups paying 5% less than companies within the
General and broader Tech industries. Whilst base pay quantum is quite similar
across the three categories of companies, variable pay (cash and equity) tends
to take up a significant proportion of total compensation in larger organisations,
as compared to start-ups.

 

Key differences in base pay of start-ups in
Singapore and the U.S.

Start-ups in Singapore enjoy a large
talent cost advantage compared to their U.S. counterparts.
The study finds that the cost of comparable talent in Singapore is
significantly lower at both the Professional individual contributor and
Managerial levels. The base salary of start-ups in Singapore compared to the U.S.
is, on an average, 12% lower across Managerial levels and 32% lower across Professional
individual contributor levels.

 

However, while the base salaries are
lower, Singapore start-ups are more aggressive with their target performance
bonus (cash) plans than their U.S. counterparts.

 

At the Managerial level, target
bonus for start-ups in Singapore is at 20% compared to 13% in the U.S. At the Professional
individual contributor level, target bonuses were also reported to be higher in
Singapore (15%) than in the U.S. (10%). The study also finds that start-ups in
Singapore are more inclined toward cash-based incentives than their U.S.
counterparts.

 

Ray Everett,
CEO,
Asia Pacific and the Middle East & Africa for Human Capital solutions, Aon,
said: 

“The rapidly evolving business environment is
compelling entrepreneurs to look for low-cost geographies that support ease of
business and fast track the development of their solutions. Substantial talent cost
arbitrage coupled with availability of strong technical talent makes Singapore
a preferred destination for start-up founders and investors.”

Equity trends among Singapore
start-ups

U.S. start-ups have traditionally used
equity for wealth creation for employees, across all levels. For example, the
study finds that 100% of the U.S. start-ups surveyed extend equity to all Executive,
Managerial and Professional individual contributor levels. Ninety percent of them
also extend equity awards to Entry and Support level roles.

 

Contrastingly, 90% of start-ups in Singapore
tend to have equity plans predominantly for roles that are at Managerial levels
and above. Only 6% of start-ups in Singapore with less than USD 25 million
invested capital have structured equity plans.

 

However, the study finds an
increasing trend over the past two-three years wherein start-ups in Singapore are
expanding the eligibility criteria for equity ownership to more levels within
their organisations. New and smaller businesses are increasingly moving towards
this model of equity compensation for broader levels with the aim to promote an
ownership culture and attract the right kind of entrepreneurial talent, regardless
of role level.

 

Clear differentiation between
Tech and Non-Tech roles

There is a clear
differentiation in equity guidelines between Tech and Non-Tech roles among both
Singapore and U.S. start-ups.

 

Tech talent are provided with higher
ownership percentages in both countries. In Tech roles, equity guidelines are
close, with 0.076% for the U.S. and 0.055% for Singapore, at the Professional individual
contributor level. For Non-Tech roles at the same level, there is a gap between
U.S. (0.038%) and Singapore (0.017%) companies.

Ravi
Nippani, Associate Partner, Asia
Pacific and the Middle East & Africa for Human Capital solutions, Aon, said, “Singapore-based founders are increasingly using equity as a
preferred vehicle of compensation, to attract, retain and reward key talent. In
these uncertain times, this also helps conserve much needed cash reserves. The
lower talent costs result in significant savings that can be deployed to
product development in the initial stages of the start-up.”

About
the Study

Aon’s 2021
Private Market Compensation survey was conducted in collaboration with SGInnovate
and concluded in the first quarter of 2021. Start-ups of various sizes in Southeast
Asia participated in the survey. The first of its kind in the region, the study
supports companies operating in highly competitive markets for talent by
providing valuable insights on rewards practices within the start-up space. The
study covers information on key compensation elements – fixed pay, cash
incentives and equity awards – across an extensive collection of jobs focused
specifically on the private market sector.