Chief financial officers have to weigh up a few variables when comparing jobs in Australia and Asia.
A sharp fall in the value of the Australian dollar has seen the relative salaries of chief financial officers in Australia drop compared with their peers in Hong Kong, Tokyo, Singapore and Shanghai.
Salary guidelines from specialist recruitment firm Robert Half reveal that, on average, Sydney-based CFOs in large companies are earning US$160,000 to US$359,000 a year, compared with US$200,000 to US$450,000 in 2014 (see tables), when the Australian dollar was trading more strongly against the US dollar.
The change highlights the potential impact of currency movements on wages, with the Australian dollar trading at about US 79 cents in May this year after reaching an all-time high of US 110 cents (US$1.10) in July 2011.
Across all sectors, the figures show that Sydney and Melbourne CFOs’ remuneration remains competitive with their Asian counterparts working in large companies, who on average earn US$194,000 to US$323,000 in Hong Kong, US$142,000 to US$250,000 in Tokyo and US$166,000 to US$362,000 in Singapore.
CFOs in Brisbane and Perth typically earn less than those in Sydney and Melbourne. But in small to medium firms, Australian CFOs’ salaries are very competitive with those of Asia-based CFOs.
Related: Confidence falls among Australian CFOs
Significantly, while the Robert Half guidelines indicate an upper limit for salaries, this threshold is often significantly exceeded within the financial services industry.
David Jones, senior managing director of Robert Half, Asia-Pacific, says the most pronounced gap in salaries between Australian and Asian based CFOs is in the financial services sector, with the global powerhouses of Hong Kong, Tokyo and Singapore having a premium weighting over regional centres such as Sydney and Shanghai.
“Bigger firms and greater responsibilities equal higher remuneration,” Jones says.
Deloitte Australia’s financial advisory services managing partner Ian Thatcher agrees that the stakes are high for CFOs in major Asian centres, as they deal with factors such as corporate governance, regulatory change, risk management and multiple jurisdictions and currencies.
Thatcher says the expanding role of finance leaders illustrates the “four faces of the CFO”: the steward (protects and preserves assets), operator (balances capabilities, costs and service levels), strategist (determines the business direction and aligns financial strategies) and catalyst (stimulates behaviours to help achieve corporate objectives).
“Bigger firms and greater responsibilities equal higher remuneration.” – David Jones, Robert Half
While traditional stewardship and operational competencies are being “commoditised” through outsourcing and offshoring, there is growing expectation around a CFO’s contribution to deploying strategy. CFOs are now being asked to drive change throughout an organisation as well as meeting financial goals.
“Globally there is a shortage of those types of skills and, as a consequence, practitioners who show that capability or competency can demand a premium wherever they are, whether it is in Australia or within Asia-Pacific,” Thatcher says.
The big variables
But the headline salary rates are only part of the story. Taxation rates, cost of living and possible housing subsidies are other considerations for CFOs weighing up job offers.
With low standard tax rates of 15 per cent in Hong Kong and a maximum of 20 per cent in Singapore, these Asian centres have a major advantage over Australia, where the top marginal taxation rate for individuals is 45 per cent.
Yet Jones notes that while there is a lower tax regime in Asia, wages can get eaten up by high housing costs. (Skyrocketing property prices in Sydney, however, mean that living there can be as expensive as some Asian cities.)
Related: Meet the CFO
The big salary “game-changer” for Australian CFOs and other expatriates working in Asia is if housing is covered or subsidised. Such benefits are more likely for executives who move within their firm to the Asian region rather than new hires, Jones explains.
There has also been a dramatic scaling back of such housing subsidies since the global financial crisis (GFC), with Asia-based corporations wanting to control costs and also opting to hire more senior finance leaders from within Asia.
Pressure to perform
So what is expected of a CFO in Australia versus their peers in Asia? Jones says the CFO salary disparity between Asia and Australia in the financial services industry is largely due to the complexity of the role in Asia’s big three banking cities – Hong Kong (a long-term global player), Tokyo (the engine of Japan, the third-largest economy in the world) and Singapore (rapidly becoming the private banking capital of the world).
Financial services CFOs in these cities are generally under more pressure than their Australian counterparts and face greater rigour around compliance and regulation, according to Jones. As such, the internal profile of Asia-based CFOs is very high.
“CEOs and CFOs are aligned in all organisations, but if you work for a financial institution the need for you to be compliant is incredibly high because essentially you work for a firm that moves money; they don’t sell products,” Jones says.
Related: How do you make the leap from CFO to CEO?
Outside the banking world, the profile of a CFO can vary depending on the size of an organisation. Thatcher says boards and chief executives are increasingly counting on “forward-looking” CFOs to play an integral role in the future direction of their corporations.
“Those that can demonstrate that foresight will fare well when it comes to remuneration,” he says.
As larger multinationals “look inwards” to train the next generation of CFOs and fill the shortage of those who can perform as true strategists, Thatcher has no doubt that there will be great opportunities for CFOs, especially in Asia.
“Asia is the next 50 years of headlines in that the fundamental drivers across Asia – population growth, urbanisation, consumerism, energy and food security – will keep CFOs well employed. They will be in high demand for as long as we can see forward.”
Post-GFC, the prospects for Australian CFOs eyeing off high-paying jobs in Asia are not as strong as in the past, according to Jones.
“The caveat would be that Australian labour is considered as some of the best in the world,” he says, noting that Australian executives have a reputation for being well educated, lateral thinkers, great communicators and entrepreneurial.
“Those skills are obviously still desired.”
For those that do go to Asia, Jones says the lure is often not just money; the other pay-offs are life and career experiences.
“Such experience is a form of compensation because [Asian] exposure can lead to an enhanced role next time.”
Soft skills and the CFO