HR departments around the globe are working on new work models: Agile, without rigid hierarchies and with enough time for family and leisure. But the fact that the new world of work must also bring a new type of pay is hardly discussed.
The world of work is in the midst of a change: the “nine-to-five” job, that is, the job in the office that you go to on time in the morning and that you leave in the evening, is still the norm. The HR departments of large corporations and medium-sized companies were working on new work models even before the Corona: Home office, the compatibility of work and leisure time and family or the individual organization of working hours are just the beginning. It’s about more: The detachment from work on rigid components such as time and space.
That amounts to a revolution in work. Because the fixed job and fixed working hours have been a constant in the world of work for many decades. But with digitization there are no longer any rigid guidelines. Only one component of the world of work seems irrevocable: payment based on time.
The salary is still an absolute taboo in Germany. The Pay Transparency Act, which was supposed to provide a little more clarity about the distribution of salaries in companies, has also failed. Wage inequality between men and women has not improved. And a look at current job advertisements shows that new jobs still involve clearly defined weekly working hours. Pay for time. Not for performance, commitment, dedication, creativity, loyalty. But simply for the time present.
Looking for new remuneration models
In the New Work movement, the experts did not stop at thinking about new forms of remuneration. Because the salary could be much more: non-monetary payment, the end of the bonus logic, further training, justice between men and women – and thus also the question of money and power. Because so far, apart from collective agreements, there is usually only more money when a further hierarchy level is climbed. Without them, little happens. While working time and location are mixed up, the salary remains as if poured in concrete.
In fact, there are quite a few companies out there trying New Pay. Usually the starting thought is that no longer everyone should be rewarded individually, but rather the team performance. So the bosses hand over the responsibility for personnel development and also (partly) for the salary to their employees. The results of collective bargaining in the metal and electrical industries show how important these issues are in traditional industrial companies. Instead of “just” negotiating a rigid increase in wages, there are now either more days off or reduced weekly working hours.
Such compensation offers are well received. Also offered: Employees had the choice of getting 2.6 percent more salary or not increasing their salary and getting six additional vacation days or reducing their weekly working hours by one hour. The majority did not opt for money – but for more free time.
Ironically, the metal industry and the railway have taken a modern path when it comes to wages. Money alone doesn’t make you happy, but more free time is more likely.
Salary transparency is complicated
Smaller companies and start-ups in particular are even more radical. You are experimenting with new payment models. One possibility: make the salaries transparent. The Einhorn condom company decided to take this step. And you have to quickly realize that it is not easy to break out of the old salary rules. All of the company’s employees had decided that they wanted to receive their desired salary. But then the disillusionment quickly came when it became clear that the company was not in the black at all, reports Elisa Naranjo, who has been with Einhorn since it was founded, “”. “Since we didn’t want hierarchies and trusting relationships, it was clear: We also had to disclose the salary. So we talked about money – and for the first time the good mood turned. We were tense and didn’t know how to deal with each other on this topic should”, . All employees wrote their desired salary on a piece of paper. Some wanted more money straight away, others during the year. The employee said there was no context.
Then action was taken: All employees sat down together, everyone said what he deserves – and what he would like to earn in the future. “It was a strange moment to reveal to all colleagues your own desired salary and the reasons for it.”
The company is now operating profitably – that also caused unrest. Because suddenly there was really money to be distributed. At Einhorn, this is now solved by a salary council. There is a fixed basic salary and a modular system: Anyone who has children or relatives in need of care gets more, even if a renovation is pending, there is an increase in wages. Professional experience is also credited in a modular way (no distinction is made between studies and years of apprenticeship). The last module is work in the company. “The employees and the salary council discuss who earns what and why, but what comes out of this is open to everyone,” says the employee.
Experience at Einhorn shows that it is possible to leave the rigid salary system behind. But it is also an act of strength.
Another point of the bonuses are abolished. No special payment to an individual manager would improve performance or bottom line, so the argument goes. But only lead to the fact that the employee will find ways to continue to receive their bonus. To speak of a performance-related remuneration is simply wrong. This is also shown by scientific studies. Experts at the University of Cologne found out that bonuses linked to target agreements reduce job satisfaction.
What motivates employees?
The reason lies in employee motivation: if an employee likes to work and sees his job as meaningful and enriching, then money does not play a major role. A monetary reward would not make the employee better. In return, this means: The employees, who can only be motivated by external incentives, give more gas with higher salaries. However, only for a short time – because this form of motivation fizzles out quickly. A study published in 2017 by the personnel and management consultancy Kienbaum makes it clear that there are first approaches to break this hamster wheel of bonuses. “Some companies are definitely considering letting the team distribute the bonuses instead of the supervisor alone. This is still a long way off for most participants, but at least ten percent of the companies are currently considering such a team distribution” , says Hans-Carl von Hülsen, study author and remuneration expert at Kienbaum, about the “”. Bonus payments are commonplace in Germany, around 90 percent of top managers and 84 percent of middle management executives receive annual bonuses. The study shows: After all, almost every third decision-maker surveyed does not believe that bonuses for bosses are still appropriate.
Salary transparency with negative consequences for employees
However – and this is also shown by studies: transparent wages are not always helpful. In the worst case scenario, they can even result in workers going home with less money. This is proven by studies by Zoë Cullen, a business administration professor at Harvard University. “We find that wage transparency pushes wages by seven to 25 percent”, almost they put their findings against the “” together. If there is a lack of transparency in the salary in companies, bosses could make generous offers to particularly good applicants – without having to fear that the rest of the workforce will want a higher salary. If, on the other hand, there is salary transparency, such upward outliers can hardly be negotiated for applicants. And thus the salary level is depressed.
Also read:
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– Inefficient in the workplace – we have to stop the meeting culture
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
