hkp/// group Workforce & Compensation Insights
Part 3: Development of employee numbers and executive headcount at major German companies
Transformation and restructuring have been on the agenda of many companies, and not just since the beginning of the COVID19 crisis. These topics always bring with them the discussion about the creation and elimination of jobs and thus the question of the right dimensioning of an organizational structure. In this context, the management ratio is inevitably also put to the test. But what is the outcome? For example, do job cuts take place to the same extent at management level as at employee level? Or is the restructuring being used to optimize the ratio?
As part of its Strategic Compensation Management Survey 2021, the hkp// group analyzed the development of the workforce and the executive population of large German companies over the last five years. This involved looking at the number of top executives per 100 employees worldwide for each company. Between 2017 and 2021, this indicator fell by an average of 10% overall, and by as much as 15% on average - in other words, the proportion of executives in a company's total workforce has fallen significantly.
Continuous decline in management ratios since 2017
"We have seen quite a bit of headcount reduction in recent years, including in Germany. In our experience, this is not done carelessly, but as a consequence of comprehensive review processes that equally took into account workforce and management structures. At the same time, we note that even in companies with rising employee numbers, the expansion of management positions is being pursued with a sense of proportion. Our data shows a steady decline in executive ratios since 2017," explains Sabrina Müsel, Senior Manager hkp/// group.
The compensation experts at hkp// group base this statement on a data base that extends to the onset of the COVID19 crisis. The subsequent development for the more crisis-affected years 2020 and 2021 is out of line, explains Jennifer Schulz, Senior Director hkp// group: "Even though the number of employees as well as executives generally declined by more than 2% in this particular period, the bottom line was that more employees were cut, so that the executive ratio rose slightly again." One reason for this could be that rapid action was required in some companies due to the crisis. "If that's the case, we should see a corresponding correction in the next few years. We are curious," said the head of compensation studies at hkp// group."
The hkp// group Strategic Compensation Management Survey not only sheds light on quotas and trends in executive and employee numbers, but also combines organizational structure data with corresponding compensation data for non-tariff employees and company performance. If you are interested in these topics, please contact us.
The hkp/// group Workforce & Compensation Insights are based on evaluations within the framework of the hkp/// group Strategic Compensation Management Survey. This provides unique insights into compensation, workforce and organizational structures and the associated costs. The survey covers three areas that are essential for operational and strategic positioning and planning: Compensation, Performance and Organization. Learn more here.
Workforce Insights published to date:
- Part 1: Large and medium-sized German businesses: Internationalization and location of top executives
- Part 2: Top executive and non-tariff employee quotas in Germany
- Part 3: Development of employee numbers and executive headcount at major German companies