Timo Lehne, managing director for SThree in Germany, Austria and Switzerland (DACH), discusses why salary is still a taboo subject in Germany and the possible benefits of a transparent remuneration system
It’s true that money is not everything and job satisfaction is still decisive when it comes to choosing an employer. Companies that want to attract the best minds and get long-term commitment should be prepared to convince candidates with an attractive salary. What’s just as important as the amount on the payslip, however, is fairness. Employees want to be appreciated and a fair salary is a pre-requisite for this.
Wage transparency in practice
A recent survey of 1,500 employees and freelancers across Germany, carried out by SThree and titled ‘So arbeitet Deutschland’ (How Germany works), found that salary fairness is something many people want to see an improvement on.
Wage transparency can help ensure fairness regardless of gender, race, religion or any other factor. For this to succeed in practice, however, positions must be clearly defined, and the requirements and tasks must be clearly set-out at different career levels. This system can then form the basis for salary levels within a company. It means that all workers, regardless of their background, will get the same salary as their colleagues at the same level, which can help to ensure better equality.
Businesses across the world are now committing to putting fairness and equality at the forefront of everything they do. At SThree in DACH, we have wage transparency in our recruitment teams and all of our recruiters enter the company on the same basic salary and have the opportunity to reach their potential.
Salary justice pays off
Many business leaders still associate wage transparency as being a disadvantage rather than an advantage. One common fear is that it is a competitive disadvantage, especially when it comes to recruiting. Managers sometimes feel that they won’t be able to attract their preferred candidates by offering wage transparency and so they don’t do it.
Since introducing wage transparency at SThree, the story we’ve seen has been different. Our experience is that applicants have responded positively and have found salary transparency to be attractive and fair. Being open about remuneration pays off in the long-term, not only in terms of recruiting, but also in terms of employee retention.
It also prevents the worst-case scenario, where colleagues exchange information about their salaries and it turns out that they are paid unfairly. This can lead to frustration, which can ultimately have a negative effect on business success because dissatisfied employees are often unmotivated, not very productive and are more likely to leave the company.
Be clear and aim high – performance must pay off
Whether it’s completing a project efficiently, winning a new customer or bringing the team to peak performance, success makes specialists and managers proud and should be rewarded. This is also the view of many employees and freelancers in Germany, with 66% of those asked in the ‘So arbeitet Deutschland’ survey confirming that they want their successes to be recognised in their salary. The study also showed that 36% of those surveyed are paid according to a pay scale, 29% according to work experience, and 25% according to their position.
Performance and success-based salaries do not currently play a prevalent role in the German working world, with just 23% of those surveyed saying they are paid based on their performance. My suggestion would be to agree performance-related bonus payments with each person in the team, the basis for which would be a career interview in which individual goals can be agreed with the employee.
As with the basic salary, a fair payment principle naturally applies to special payments, so everyone at the same career level should have the chance to receive a bonus of the same amount as their peers, provided that the agreed targets are achieved.
Be courageous and get rewarded
Whether in the monthly salary or the annual bonus, I am convinced that fair payment pays off in the long-term, both in attracting new employees and in retaining long-standing ones. In my experience, the courage to make pay transparent is rewarded with a motivated team and a top performance.