As we predicted in November, ’10, US$80,000 has become much more the standard in Hong Kong and China. 80k has replaced 60k as what is considered a highly competitive number.
Most US and UK firms in Asia seek our advice when they are considering any changes to their US associate expat / cola benefits package. In some cases we have even helped draft expat benefits policies for firm clients opening new offices in Asia. The reasons are quite simple: a) the hiring partners at these firms know us well after years of working together; b) they know we see more offer letters than anyone else in the market, from firms they consider relevant to them re associate recruiting; and c) unlike in other overseas markets (such as Moscow and Dubai for example), most US and UK firms in Asia tend to not share this information with anyone (recruiters, candidates or other firms), except when they provide offer letters. Thus Robert Kinney and I have been asked for advice in this area from firms in Asia for years, going back to ’05. Alexis Lamb has been helping firms with this information in recent years as well. In a way, firms share this market info in Asia through our team at Kinney because most firms get the expat / cola market info from us. Without any doubt there is not any better source than our Kinney Asia team for major law firm expat / cola allowances in Asia.
With that said, we of course are never going to publish any specific firm’s expat / cola allowance information. In our posts on expat / cola allowances, we are only going to divulge general market info, without naming firms. However, of course we do provide to our US associate candidate clients all the details on specific firms’ expat / cola policies that we cannot publish here.
Recently, we are seeing quite an uptick in the market regarding these allowances. For example, in the past few months a magic circle firm has moved from 65k to 85k and three more Wall St. firms have moved from an allowance in the 60s to the 80′s. Here is the current breakdown of expat / cola allowances above 80k at the top end of the market in HK / China, compared to 18 months ago (these numbers are for associates with no children as some firms pay substantially higher allowances for associates with children):
US$90,000 and above
-There are currently three US firms (although one of these firms has tax equalization on the base, so the overall take home pay is not top market).
-18 months ago there were 2 firms at this level.
-There are currently 3 firms at this level, one UK firm and two US firms.
-18 months ago there were no firms at this level
-There are currently four US firms at this level.
-18 months ago there was one US firm at this level.
Thus, in early ’10, only three US or UK firms in HK / China were paying $80,000 or higher expat / cola allowances for all their US associates with no children. Today that number has increased to ten firms. Further, we have seen offer letters this year with US80,000 or higher allowances from additional firms, not among the above ten firms. Although it is not the approach of the majority of firms in the market, a number of firms do figure out expat / cola on a case by case basis, rather than a uniform amount for all their US associates. Some of these firms have been offering US$80,000 or higher allowances recently as well (although not to all of their US associate offerees).
Most of the top Wall St. firms are still below 80k, but we expect that to change over the next 6 months. Of the above ten firms, only four are Wall St. firms. Three other Wall St. firms offer expat / cola allowances in the 70′s and most of the rest are in the mid 60′s. It is only a matter of time before most of these firms will raise their allowances to the 80s and a few of these firms are already in serious internal discussions to do just that.
One significant change in the market in the past 18 months is that the very top market expat / cola allowances are not coming from Wall St. firms, but instead several US firms not based in NYC as well as one magic circle firm. A few of the top Wall St. firms that had for years been paying top 5 allowances in the HK / China market are now no longer even in the top 15 in allowance amount. Further, due to some US firms offering sometimes very high allowances, on a case by case basis, it has become common for Wall St. firm offers to be lower than other firms they may be competing with for a particular candidate.
A couple of Wall St. firms raised their allowance from the 60s to the 70s in the past year and it took a lot of internal discussion and a fairly long approval process from NYC senior management to happen. Most likely those firms will raise to the 80s within the next year, but these firms’ partners in HK / China have to go through a process to get such a raise approved and it can take time. On the other hand, some US firms give their senior partners in Asia a lot of discretion in raising or lowering (rarely happens even in down market) expat / cola allowances and at those firms the process can be as little as a few days from HK / China office request to US senior management approval. There are some US firms that will be in the 80s soon, but are simply waiting for US senior management to approve the raise.
There are still several major US firms that do not pay any allowances to US associates in HK / China. Those firms are having a difficult time recruiting and retaining the top US associate talent. In some cases, these firms provide large signing bonuses to especially sought after offerees, in order to help counter their firm’s strict no expat / cola allowance policy.
About half of US and UK firms which pay competitive housing / cola in the region will also provide substantial additional allowances for US associates with children. These additions can range from $10,000 to as much as $80,000, depending on the firm. For example, one of our mid-level US associate candidates, married with one child, was recently offered an expat / cola allowance of US$125,000 (at a firm that offers US$95,000 for unmarried associates with no children). Another of our mid-level candidates with two children was recently offered US$105,000 (at a firm that figures out expat / cola on case by case, with associates with no children typically receiving around US$75,000 for their allowance). The most generous of firms in this area is a US firm that offers an additional $20,000 for one child and then another additional $55,000 for a 2nd child. Most firms that do offer additional allowances for associates with children limit the increase to $10,000 or $20,000 per child.
Also, a growing minority (but still a small minority) of top US firms also provide tuition reimbursement assistance for associates with school aged children. This is critical for associate with multiple children in school because the cost can easily be over $20,000 per child per year. A handful of firms provide full reimbursement, but most firms that do offer tuition reimbursement limit it to $10,000 reimbursement per year per child. We believe that this $10,000 reimbursement will catch on and eventually be offered by most firms (although it may take a couple of years for a majority to offer this). Keep in mind that the handful of firms in HK / China which offer their housing / cola allowances on a case-by-case basis (rather than have a set policy for a certain allowance across the board for all US associates) of course take into account whether an associate has children.
A growing trend in the market is more US and UK firms offering their US associates “home leave” benefit on top of the expat / cola allowance. This benefit is usually economy or business class tickets for the immediate family to anywhere in the world (or in some cases, limited to the associate’s home country or US). In other instances it is provided as a cash allowance. Less than 50% of firms offer home leave assistance, but it is a growing practice.
In Hong Kong and China, there is and likely always will be a fierce competition among peer firms for the very best talent available and the top US associate talent will expect a competitive expat / cola allowance. While it is very rare that an associate candidate will choose one firm over another for less than a $20,000 difference in expat / cola, a larger difference will usually be influential in a decision. If you would like more information on expat / cola allowances in HK / China and other Asia markets, feel free to reach out to us at Asia@kinneyrecruiting.com.
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