How Much is Talent Worth?

Singapore needs foreign talent. This need is nothing to feel bad about. It is a statistical fact of life. For every top Singaporean in any field — be it science, medicine, finance, sports or whatever — we will find about 500 professionals of equal caliber in China and India. Not because we are 500 times less talented, just that they have 500 times more people.

Coupled with overwhelming statistical supremacy, certain countries have special superiority in their chosen or accidental specializations. We expect to find more hardware experts in China, more software gurus in India, more badminton players in Indonesia, more entrepreneurial spirit and managerial expertise in the west.

We need such experts, so we hire them. But how much should we pay them? That’s where economics comes in — demand and supply. We offer the lowest possible package that the talent would bite.

I was on an expatriate package when I came to Singapore as a foreign talent. It was a fairly generous package, but cleverly worded so that if I became a “local” talent, I would lose out quite a bit. I did become local a few years later, and my compensation diminished as a consequence. My talent did not change, just the label from “foreign” to “local.”

This experience made me think a bit about the value of talent and the value of labels. These values translate to compensation packages that can be ordered, from high to low, as: Western (Caucasians), Western (of Asian origin), Singaporean, Asian (Chinese, Indian, etc.).

I’m not saying that all Caucasians in Singapore do better than all Indians and Chinese in terms of income; but the trend is that for the same talent, Caucasians tend to be better compensated that their Asian counterparts. Nothing wrong with that — it’s all about demand and supply, and the perception of value and such economic fundamentals. Besides, this compensation scheme has worked well for us so far.

However, the locals are beginning to take note of this asymmetric compensation structure. When I was considering hiring a Caucasian, my ex-boss commented, “These Ang-Mos, they talk big in meetings and stuff, but don’t do any work!” He may have oversimplified; I know many “Ang-Mos” who are extremely talented and fully deserve the higher-than-local compensation they enjoy. But this perceived disparity between what the talent is worth and how much it costs (as depicted in the movie I Not Stupid) is beginning to hurt employee loyalty to such an extent that firms are experiencing staff retention issues when it comes to local talents.

The solution to this problem is not a stricter enforcement of the confidentiality of salaries, but a more transparent compensation scheme free of anomalies that can be misconstrued as unfair practices. Otherwise, we may see an increasing number of Asian nationals using Singapore as a stepping stone to greener pastures. Worse, we may see locals seeking level playing fields elsewhere.

Let’s hire the much needed talent whatever it costs; but let’s not mistake labels for talent.