APAC organisations lag in matching pay to employee skills: report

Most activity has focused on areas like career development, learning, and recruitment.

Only one in five organisations link compensation to employee skills, and fewer than 15% factor skills into bonuses or incentive schemes, despite growing interest in skills-based workforce strategies across Asia-Pacific, according to Aon’s 2025 APAC Skills Impact Survey.

Whilst companies increasingly view skills as essential to talent planning and business success, efforts to embed them into core HR functions remain uneven. Most activity has focused on areas like career development, learning, and recruitment, whilst compensation, workforce planning, and performance management continue to lag.

Ninety percent of organisations consider skills initiatives important, and nearly half regard them as critical to long-term business and talent outcomes. 

Over the next two to three years, the top priorities for firms include attracting and retaining talent, enhancing workforce agility, and strengthening leadership pipelines. In response, 61% of companies have introduced skills-based initiatives, mainly in leadership development and succession planning.

However, progress is limited by gaps in measurement and design. Whilst 68% of organisations report having a skills framework, only 26% have applied it enterprise-wide, and fewer incorporate external market benchmarks. 

Assessment methods still rely heavily on manager evaluations and static job descriptions, with more advanced tools such as AI-powered platforms and KPI-linked evaluations remaining underused.

Key barriers include budget constraints, a shortage of expertise, and challenges in measuring impact. Over half of firms cite limited funding as a primary obstacle. Still, 24% plan to increase their skills budgets, and 39% expect no change, suggesting moderate optimism despite economic pressures.