Fair Pay in small and medium-sized enterprises
Fair Pay for all employees, regardless of laws or company size - many global corporations have long since demonstrated how this works. But how can the success of big companies be transferred to small and medium-sized enterprises? Our Virtual Round Table for SMEs was a technical premiere - which will certainly be continued!
Large corporations such as IKEA, Evonik, and Adobe have long been setting a good example: They ensure Fair Pay for all their employees worldwide, at all locations and regardless of local legislation. But how can a fair compensation strategy be implemented without a large HR department? Can small and medium-sized companies even afford Fair Pay, especially in times of crisis?
From the screens in their offices and various home offices, from some balconies and - as far as W-LAN allowed - even from the ICE train, the participants on 5 June 2020 met to deepen their Fair Pay knowledge at the Virtual Round Table for SMEs. Our host Ute Oldenburg from Toll Collect GmbH provided the technology. The tool of choice: Webex.
The virtual event focused on the challenges that small and medium-sized enterprises face. The impact of the "German Mittelstand" on the German economy is huge. 99 percent of companies in Germany belong to the “Mittelstand”: A total of around 3 million companies, from small craft businesses to medium-sized industrial companies to service providers, from hidden champions to world market leaders. Four out of five trainees in Germany complete their professional training in one of them. And more than one in two, 56 percent of all employees in Germany work in the “Mittelstand”.
In other words: An extremely large number of employees in Germany is affected by fair payment in medium-sized companies. On the other hand, not being prepared for the future of work would be hard on small and medium-sized businesses: Younger employees care much more about fair conditions than their parents and grandparents in previous generations did.
Fair Leaders do better business
The German Pay Transparency Act provides obligations to companies with 200 or even 500 employees or more. For many small and medium-sized companies, the requirements do not apply. And many of them shy away from the bureaucratic hurdles and fear the high costs.
State Secretary Juliane Seifert from the Federal Ministry for Family Affairs explained how unfounded this is. "Small effort, big benefit - is the motto of the new equal opportunities check for small and medium-sized companies," Seifert stated in her keynote. The brochure provides companies with practical tips and suggestions on how to achieve equality for all employees. The costs are often surprisingly low, and Fair Pay can be implemented regardless of the company’s size". In times of crisis, the importance of fair payment for everyone becomes particularly clear.
Fair Pay has long been an executive matter at Berliner Volksbank, as Gabriele Kinast explained in her subsequent talk. As Head of Human Resources, she also stressed how transparent and identical for everyone a remuneration system must be. The cooperative model of Berliner Volksbank also means equal profit sharing for everyone - even for part-time employees.
Applying the Categorical Imperative to salary
"Treat others as you would like to be treated, this should apply to salaries, too." Also in compensation matters, the Categorical Imperative is a guiding principle for Tom van der Lubbe, co-founder and CEO of Viisi. As financial and HR expert Lubbe explained how the change from the old to the new system succeeds. To van der Lubbe, Fair Pay is not a moral obligation, but a business necessity: after all, fluctuation turns out much more expensive than implementing a fair payment system.
In the following webinar, Jens Maßmann, partner at the auditing company EY, showed how companies proceed after the initial analysis. The financial strategist and compensation expert, particularly for executive compensation, joined us from the Taunus region and reminded us of one of the important issues in the compensation process: the well-being of the employee. In another parallel webinar FPI strategy expert, Katinka Brose presented test procedures and instruments for companies that are at the beginning of the process of paying fairly. An overview of the tools and methods - partially free of charge - are listed online in the FPI Tool Compass. Brose’s warning to all participants: "Fair Pay is addictive.”
Starting point: analysis
Previously to the event, many of the participants had taken part in a quick poll. The result: every second small and medium-sized enterprise or organization has a pay strategy. In just as many companies measures to close the gender pay gap are already being implemented. Surprisingly, at the same time, in the vast majority of companies, the gender pay gap has not yet been calculated at all. In reverse, this means that in many cases measures are being taken against an unknown variable. And in every second company, the poll revealed that nothing has been done at all so far.
After the constructive exchange in front of the various screens, one thing is certain: Even with little effort, Fair Pay is possible. With all the best practice insights gained at the event, hopefully, everyone will start to implement Fair Pay quickly. The process always starts with an analysis: With the right instructions this first and most important step can be accomplished in no time - the subsequent process takes a little longer. Knowing the size of your gender pay gap and analyzing the causes, will enable you to select the right measures to aim for Fair Pay by efficiently implementing neutral and objective pay structures.
This very first purely virtual exchange will certainly be continued - we are already preparing our next webinar. If you want to get all details on time, please subscribe to our newsletter, or send us an email if you want to receive a personal invitation.
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Best Practice wanted
Wir sind der festen Überzeugung, dass Lohngerechtigkeit schon morgen möglich wäre – wenn alle sie wollten. Das zeigen gerade jene Unternehmen, in denen es schon jetzt fair(er) zugeht.