An interview with fairness expert Ulrich Wiek
„Fairness als Führungskompetenz“ (Fairness as a leadership skill) is the title of the latest book by fairness expert, Dr. Ulrich Wiek. We spoke to him about luck and chance in salary negotiations, performance criteria and the costs of unfair behaviour.
Fair Pay Innovation Lab: You write in your book that fairness pays off and unfairness has a cost. What makes unfair management behaviour so expensive in practice?
Dr. Ulrich Wiek: Unfairness is quite simply a “co-operation killer”. Unfair management demotivates employees, fuels mistrust and reduces people’s willingness to cooperate.
Unfairness has severe long-term health repercussions, with consequences ranging from stress responses, cardiovascular diseases and sleep disturbances, through to depression.
Unfair business practices also lead to visible loss of image and higher churn rates, as well as increased absence and business-damaging behaviours such as theft and sabotage.
Management and companies that behave unfairly can expect more frequent legal disputes, penalty payments and even imprisonment. The legal position and jurisdiction of the court have changed noticeably in recent times.
The result is that unfair management behaviour is expensive for everyone.
Your maxim is that “In an uncertain world, fairness comes first.” How is fairness a benchmark for successful employers and how can companies profit from this?
A company’s reputation has a significant influence on its attractiveness as an employer. With skills shortages, companies will benefit if they can position themselves as fair and decent in the eyes of the public.
You claim that luck and chance play a large role in salary negotiations. Does this mean that in salary negotiations, randomness will prevail?
When salary is negotiated individually and without transparency, the “randomness factor” seems to be particularly high. What is actually being recompensed? Performance? If so, doing what? Is it the performance across the entire year, or the negotiating skill of the individual during salary reviews that’s being rewarded? Where does “likeability” fit in all this?
In the majority of companies, salary is performance-oriented. But how can performance be defined and measured?
The crucial question is: what do we mean by performance? In many companies, performance is measured by numbers such as personal sales figures – but no consideration is taken of the damaging side-effects such an incentive system can produce. These systems reward egotism, rivalry and an “everyone for themselves” attitude. As a result, other important performance elements within a company are often completely overlooked. If co-operation skills, helpfulness or transfer of expertise aren’t valued, then we routinely compensate counterproductive “merits”.
So I’d welcome systematically introducing behavioural components into performance evaluation, such as fairness and co-operation levels. These elements don’t translate easily into monetary units but are for all intents and purposes “objective evidence”. That’s why we need to set out our desired behaviour patterns, such as “being transparent”, “motivating” or “actively intervening against unfairness”. Those behaviours can then be monitored.
If we want to use performance as a criterion, a little more humility is often also appropriate in assessing personal performance. We frequently forget how unequal, unfair and random starting points are for individuals. Although many prefer not to hear it, we know that today – particularly in Germany – careers, performance and success rely largely on luck and chance. Ideally, you are male, born into a particular family or country, have had a good education in a good school, or simply enjoy good health.
In Germany, talking about money is still taboo. Do you believe it will stay that way, or have you noticed a move toward more fairness and transparency?
Legislation is providing the impetus, such as through the German Law on pay transparency. Transparency is important to people. Pay variations can be tolerated – as long as they are justified and are transparent for the most part.
What would your ideal salary system look like?
To begin with, the entire market-oriented principle of salary determination would have to be shelved. Leaving it up to the market to be the sole or dominant decider doesn’t lead to fair remuneration – as witnessed by the Gender Pay Gap. Statutory provisions are also key here.
Secondly, laws also need to eliminate extremes at both ends of the salary structure and cater for a minimum wage and a cap on the highest salaries. It’s hard to justify why the pay of VW’s CEO is 127 times that of a VW Project Manager. Not to mention the difference between VW’s CEO, who earns several million euros, and the salary of the German Chancellor which is around 300,000 euros. “Performance” and “responsibility” can’t explain differences of this magnitude.
If we reduce the pay gap, we also alleviate a serious problem with salary fairness. Most people don’t see the highest salaries as unfair in themselves, but rather the difference in comparison with others. It’s not “egalitarianism”, but a realistic assessment of “differences in performance”. Previous research suggests that most people believe the pay of top earners should not be more than 45 times that of assistants. This factor certainly still allows enough scope for “performance-oriented” salaries.
Thirdly, my previously-mentioned team-oriented salary, into which performance criteria are incorporated, would then influence teamwork and also criteria such as cooperation skills, knowledge sharing – or even fairness. It’s a far more powerful solution.
Thank you very much for this interview!