Compensation is an integral part of corporate management and a success factor for achieving corporate goals. How to structure compensation practices is a key factor for successful HR management. However, there is a lack of large-scale evidence on compensation strategies and their effectiveness. To provide new evidence, researchers from the University of California, Berkeley, are conducting an online survey in collaboration with the ifo Institute and supported by hkp/// group. hkp.com spoke with Ingrid Hägele, labor market economist and head of the study, and Petra Knab-Hägele, senior partner and compensation expert at hkp/// group, about the background and key aspects of the survey.
Ms. Hägele, you are in the process of launching a large-scale, scientific survey on current compensation strategies in Germany. What are your objectives?
Ingrid Hägele: The aim is to collect new Germany-wide data on which compensation strategies companies pursue and how effective these strategies are in attracting and retaining talent. As labor market economists at the University of California, Dr. Sydnee Caldwell and I worked together with the ifo Institute on developing a scientific survey to collect this data.
What made you decide to focus on Germany?
Ingrid Hägele: Germany is a particularly interesting case study; it’s an important business location with a really diverse set of companies, particularly with respect to the many medium-sized businesses. In addition, Germany has a complex legal and regulatory frameworks, which potentially gives rise to a range of different compensation practices. We anticipate a wide variety of feedback on compensation practices via the survey, which will provide interesting insights into the spectrum of possible corporate strategies and cultures.
Which is why the survey took relatively long to develop?
Ingrid Hägele: We want to gain important insights into an area of labor economics that has seen very little research. So, when we were drafting the survey, we collected insights from over 100 HR and compensation experts working in German companies, including hkp/// group experts. The survey therefore brings together scientific methods and practitioners’ insights. This means that the results aren't just of interest to researchers but also provide important compensation benchmarks for companies in Germany.
Ms. Knab-Hägele, based on your own view of the market, does the survey cover the relevant aspects of compensation structures and the implications of these?
Petra Knab-Hägele: We believe that the survey does indeed do that and we expect to gain interesting, wide-ranging insights into current market developments based on a sound scientific foundation. This is one of the reasons why we have invited Ingrid Hägele to speak at the German Compensation Day event in Berlin on November 9. It is here that she will give her first insights into the survey’s results.
Could you elaborate a little more on the contents of the survey?
Petra Knab-Hägele: The survey consists of three series of questions. The first focuses on the strategic importance of compensation benchmarks, the second on transparency as a key factor in designing compensation structures. While the first part looks at how informed companies are about the compensation of competitors and the strategic importance of market comparisons, the second deals with company strategies regarding transparency and internal communication of compensation structures, and particularly the pros and cons that must be considered.
And the third part of the survey?
Ingrid Hägele: The third part focuses on flexible compensation as a way forward. Here we look at how flexible the compensation of companies headquartered in Germany is in terms of compensation structure and the circumstances in which flexible compensation is particularly important.
Ms. Knab-Hägele, is there any relevant content that isn't included?
Petra Knab-Hägele: As survey experts, we are well aware that a survey needs to be manageable for participants as part of everyday working life. That’s not possible without making comprises on complexity. And the goal is to obtain answers as widely as possible. So, there may well be one or two aspects of content that could have been given more weight, but whose absence doesn’t impact the viability of the results.
Can you give a specific example?
Petra Knab-Hägele: I’m thinking of aspects like share-based compensation and employee participation or even company pension schemes. But these are actually special areas with a high degree of complexity and corresponding legislation, which can’t be dealt with briefly as side issues and for which there are already well-founded expert analyses.
Who can participate in the survey and how?
Ingrid Hägele: HR and compensation experts from companies in Germany are invited to participate in the online survey – without any restriction in terms of industry or size. As a matter of fact, we want to cover as many industries and different organization types as possible. To ensure that our survey fulfills a high-quality standard, we invite all interested individuals to register via the ifo Institute’s study website. Upon registration at https://www.ifo.de/hr-umfrage-registrierung, individuals will receive a personalized invitation for the 15-minute online survey.
How will participants benefit from the results of the study?
Ingrid Hägele: All participants receive access to exclusive market insights from the study once the survey has been concluded. As part of this, we share detailed findings on best practices. This provides companies with concrete information on how their compensation strategies compare to the market and how the design of compensation structures can be optimized.
Ms. Hägele, Ms. Knab-Hägele, thank you for the interview.
About the research team
Ingrid Hägele and Dr. Sydnee Caldwell are labor market economists who conduct research on the interaction between organizations and employees in the labor market. To date, their research has utilized large-scale surveys together with detailed corporate data, and has focused particularly on the German labor market. Dr. Sydnee Caldwell is an assistant professor at the University of California, Berkeley. She holds a PhD in economics (MIT) and was a postdoctoral fellow at Microsoft Research New England. Ingrid Hägele is currently pursuing a doctorate in economics at the University of California, Berkeley and will become an assistant professor at Ludwig Maximilians University (LMU) in Munich in 2022.