Fair Pay Management Circle on 16 April 2019 at Allianz in Hamburg
And yet they are changing! Many companies have been committed to fair pay and pay transparency far beyond the legal requirements. But to what extent does a successful remuneration strategy contribute to cultural change? This was the topic of discussion at the Fair Pay Management Circle at Allianz in Hamburg.
“We've always done it this way!” Change is not always easy, but it is inevitable. Traditional industries in particular are faced with the challenge of adapting to changes in the market and simultaneously coping with shifts in internal culture. Changes can also be seen in the financial and insurance sectors. Banks and insurance companies are still among the companies with the greatest difference in income between women and men. The average gender pay gap for insurance companies is 28 percent, which is well above the German national average of 21 percent.
Allianz is a happy exception. Indeed, the world's largest group has nearly closed its gender pay gap and has long afforded a considerable amount of importance to transparency and communication, especially when it comes to money. On 16 April 2019, the insurance company hosted a Fair Pay Management Circle in Hamburg, where a small group of selected guests from business, academia, and politics discussed the topic of ”Changing Corporate Culture."
"The old disciplinary leadership behavior has become obsolete," says Kathrin Janicke, head of the Rewards & Performance Division at Allianz. She kicked off the event with a presentation of Allianz's remuneration strategy: "In general, a lot has happened in the last 25 years. In the past, men received a salary increase for their first child, while it was clear to expectant mothers that they would have to wait a very long time for a raise. I don't see that anymore." In the meantime, the company is looking very closely at where men and women are located in the salary system that is bound to collective bargaining agreements. Outliers – both upwards and downwards – are checked to see whether salary differences can be explained or if adjustments have to be made. This process is carried out on an annual basis. Janicke maintains that it isn’t only companies who are responsible for the establishment of fair pay: “Above all, politicians are responsible for the provision of decent and affordable childcare, as opposed to financing a two-month family holiday through parental leave.”
But it's not just insurance companies that are undergoing change – transformations in the banking sector are in full swing, too. Frauke Hegemann, the new COO of comdirect, views this process quite positively: "Everyone benefits from this development. Working in teams with both men and women is very inspiring, especially at the higher levels."
The German credit institute based in Quickborn near Hamburg has reformed its strategy, too. Nowadays their focus is on such topics as women and finance, as well as women in leadership. Strategic and cultural developments go hand in hand: “The financial sector also used to keep quiet about money. That’s different today. Younger employees in particular are relatively open about their salaries. This automatically leads to more transparency and equality.”
Where there’s no will, there must be a legislative way
Not all companies proactively address change: if the desire isn’t there, then there is need for legislation. But even legislative means aren’t always effective, which Markulf Behrendt, law partner at Allen & Overy, finds to be the case in the enactment of the Transparency of Remuneration Act: "We had expected that companies would be jolted into action, but this didn’t take place. Interest is negligible, and experience has been very sobering." This is also due to the structure of the law, says the remuneration expert: "A median has no meaningful value – it doesn’t ensure transparency at all.” Kathrin Janicke's experience with the law is also rather sobering: "The right to information is rarely exercised, and the result often falls short of the employees’ expectations.” Nevertheless, Janicke believes that this legislation is a very good signal: "The law ensures that Equal Pay will be spoken of much more.”
Spare parent-and-child offices
So there is some potential for improvement. But changes are always accompanied by experiments that end up being more or less successful. Not all employees can work in garages, and not everyone wants to work in a home office. And not every package offered by a company is accepted: some parent-child rooms in offices remain unused forever. But there is consensus that there is no reason not to try out further measures in practice.
The only point of disgreement among participants is whether there are not enough women who are suitable for management positions, or whether companies are not as serious about placing women in management as they say they are. The latter diagnosis applies at least to those companies that have set themselves a female quota of exactly zero. It would be far better to set a target of zero in terms of pay transparency – zero percent gender pay gap! However, this irrefutably requires women in leadership, as well as the will to change.
As at every Fair Pay Management Circle participation was exclusively by personal invitation; the event itself was subject to Chatham House Rules – the best prerequisite for an open and constructive dialogue. We therefore relay nothing that would allow it to be traced back to the people involved or guests, or to their companies or organisations – unless they have explicitly agreed to be identified.
The next Fair Pay Management Circle will take place on June 27, 2019 at SAP in Walldorf, where the FPI will be a guest for the second time. The topic will be transparency in an international context.
FPI - What we do
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