The ethics of pay - striking the proper balance

With growing wealth disparity around the world (the eight richest people are worth as much as half the world’s population) and the erosion of the wealth of many families, executive compensation has come under serious scrutiny. A recent study by PwC in partnership with the London School of Economics, “The ethics of pay in a fair society — What do executives think?”, looks at how executives around the world consider principles of distributive justice as they apply to compensation in their organizations and society.

The key challenge in distributive justice is that some of the basic principles of fairness are mutually incompatible. Consider principles based on need, equality and contribution, for example. Only in the truly exceptional case where all people have the same exact needs and have performed exactly the same will the principles agree. Thus, as the researchers argue, achieving complete perceived fairness is an impossible task. An encouraging result of the PwC study is that executives have views of fairness that acknowledge this conundrum. They tend to show the strongest support for four very different principles:

It seems rather than thinking the market should decide, or that pay systems should ensure that individuals be able to live a dignified life, executives believe compensation at the organizational and societal levels should incorporate elements of both. This is heartening because in the perfect world there should always be some balance. Contribution-based principles provide an incentive for performance, need-based principles ensure basic dignity is met for most people and equality-based principles ensure some sense of shared identity. The trick is to find the right balance.

The authors identify four groups of people, or “tribes”, that address this question of balance in different ways, giving greater weight to a one or two principles over the others; one intriguing result is that older people would rather have the market decide, while younger people prefer protection on basic needs and dignity in our compensation systems. Moreover, in the case of both companies and society, respondents generally believe that we are failing, not only to meet standards for equality of opportunity, but also to provide compensation sufficient for basic human needs and a sense of dignity.

Why should we care? Given the growing concern over inequality in the world, it is incumbent upon us to create systems that ensure market success and performance for our firms, but also remember the lessons of Louis XVI and the Romanovs. If key principles of fairness are not met, societies tend to crumble and those on top find themselves in unhappy circumstances. As Will and Ariel Durant noted, when such an imbalance has existed historically, we’ve seen a correction either through “legislation redistributing wealth or by revolution distributing poverty”.

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Contacts

Dr. Robert Kuipers
Partner People & Organisation PwC
+41 58 792 45 30
robert.kuipers@ch.pwc.com

Remo Schmid
Partner People & Organisation, PwC
+41 58 792 46 08
remo.schmid@ch.pwc.com

 

Inclusion and Diversity – how employee benefits can show you mean what you say

Diversity and inclusion is in the headlines. Boardroom representation, unconscious gender bias and equal pay are big news on the business pages. So what is diversity and inclusion (D&I)? Diversity is about all the ways we are different, our uniqueness. Inclusion is being valued for this difference. To put it simply, diversity is about being invited to the party, inclusion is about being allowed to dance.

Research shows that having a diverse and inclusive workforce improves business performance and is crucial to attracting talents. For businesses it also means you’re echoing your (diverse) customer base. Many of the best innovations have been shown to come from leveraging the organisation’s diverse employee base to generate ideas that reflect the diverse market place of today and most importantly tomorrow.

1 Source: Harvard Business Review, “How Diversity Can Drive Innovation”, December 2013
2 Source: PwC, 18th Annual Global CEO Survey, 2015
3 Source: PwC, The Female Millennial, 2016

What does this mean for HR?

HR have a key role to play in this area, both as an enabler for the CEO’s agenda, and as the organisation’s ambassador against reputation damage inside and outside the business. HR are best placed to understand the different needs of a diverse population of employees, and execute the changes needed to foster an inclusive workplace.

What are those needs? It’s recognising “one size does not fit all”, particularly when it comes to policies and benefits. Some employees value career progression, others focus on wages, while many will want to understand the flexible benefit arrangements offered. How you provide for these diverse needs affects both the talent that you want to retain within your organisation and the employer brand to prospective talents.

We were recently asked: What does diversity and inclusion mean for the benefits we offer employees? Benefits can be grouped as “intangible” benefits, which have an unclear cost and benefit, but can be highly valued, and traditional employee benefits like retirement, insurances and other offers. Both can play a big part in fostering diversity and inclusion. The design of benefit packages and offers can incentivise and support the change we want to see in our workforce whether this is ensuring our pension plans accept same-sex partnerships, flexibility around religious holidays or even allowing adoption leave.

Intangible benefits – hidden value?

Each employee will value intangible benefits very differently, some seeing no real value while others may see this as key when choosing an employer. Many employers forget that intangible benefits can have the biggest value to employees, but at the lowest cost. And these benefits can be essential to a diverse workforce. Here are some examples:

  • Flexible working culture – What is your policy on working from home? How do you ensure that technology is up to speed to allow mobile working? What is the dress code? For example, are shorts allowed in summer time? Offering flexibility in how and when people work has been shown to boost employee engagement and is critical to meeting the needs of a diverse workforce. Are you looking at that?
  • Wellness – Healthier people perform better, cost less and cause fewer risks to the organisation. Physical health initiatives are already common place. The next wave is financial wellness. Some employers are looking to help employees manage their financials. A healthy employee with a mind free of financial stress is more engaged and more innovative.
  • Career progression – Lack of career progression opportunities is a key reason why some leave their jobs. Solely throwing pay at employees is not the answer, supporting career progression by being transparent about job opportunities, providing role models and mentoring is. To support diversity, you need to offer the right types of training alongside mentoring support, sometimes targeted at minority groups.

Traditional benefits – supporting and protecting the message

Traditional employee benefits can also impact the diversity and inclusion agenda:

  • Supporting and enabling the diversity agenda – Our benefit package can back up what we say. If we say we are a diverse employer, our benefit packages must be diverse too. Flexibility and choice is the natural ally of D&I, whether this is different levels of pension contributions, opt in/out insurance policies or buying or selling extra holidays.
  • Eroding the message – Good work on diversity and inclusion can be undone by benefits that do not align with diversity. If we only give employees leave when their child is born, but not when they adopt a child, what message does this send? Getting design wrong may turn our messages upside down.

What can you do about it?

We see two obvious steps to take:

  • Analyse and diagnose what you do today – Do your benefits, both intangible and traditional, support the diversity and inclusion agenda of the organisation? As well as a deep dive into the terms and conditions around your benefits, you may also need to analyse outcomes and how these look for different social groups.
  • Communicate and engage – Engaging employees on this is one way to show how important you see this topic. Communicate what you’ve found and get feedback on what employees themselves value. You may find low-cost options with high value to employees. Employee surveys can help, but simple direct engagement may be more valuable.

Not just buzzwords

Diversity and inclusion are not just new “buzzwords”. The workforce and customer base will continue to become even more diverse. Legislation, such as equal salary legislation, will force companies to ensure they are treating people fairly and equally. Getting your benefit packages right is one way to both enhance and support the diversity and inclusion agenda. Time to get on the dancefloor.

Contact

Adrian Jones
Director, People and Organisation
Tel: +41 58 792 4013
adrian.jones@ch.pwc.com

Sue Johnson
Senior Manager, People and Organisation
Tel. +41 58 792 90 98
sue.johnson@ch.pwc.com

5 micro-actions to drive Equal Pay in your workforce

Does Santa arrive on February 24 with Christmas presents for your daughters?

As parents we strive to treat our children the same, after-school activities, homework, pocket money, household chores – boys and girls get the same, the thought of making our daughters wait until almost the end of February for their Christmas presents whilst watching their brother open theirs on Christmas Day seems unthinkable!

This unthinkable however becomes a reality once we enter the grown up world of work. The average women in Switzerland needs to work 551 days longer than a man to earn the same salary, for the same work – this year’s equal pay day was on February 24. According to the European Commission, at the current rate of progress, the salary gap will close by 20772, by then my daughters will be 78 and 76 years old! And I (probably) sadly will not be around to witness this fundamental measurement of equality take place.

Government legislation regarding non-discrimination has been in force for years, and 73 countries in Europe have even gone so far as to legislate the representation of men and women on company boards. How come in-equal pay is still acceptable for equal work?

We can all make a difference to closing the gap by carrying out these conscious micro-actions every day:

Drive equal-pay for men and women with PwC

1. Set starting salaries based on internal benchmarks – not previous salary levels

As human beings, we are all susceptible to unconscious biases, one of these is called ‘anchoring’. This is where our mind gets fixed on an initial number (the previous salary), with the result that when it comes to offering a new salary, there is a tendency to anchor too much on someone’s current salary instead of what the job is actually worth.

A micro-action Google has taken is to exclude the candidate’s previous salary data from the hiring process. The results are clear – during 2015, women hired at Google received a salary increase on joining that was 30% higher on average than their male counterparts4.

Another simple action is to use pre-defined salary grids, the pay gap starts when people enter the workforce (in the UK, male apprentices are paid upto 2.0oo GBP p.a more than their female colleagues)5 widely communicating and tracking the adherence to these starting salaries will level the playing field.

 

2. Regularly track and monitor your workforce pay – know your numbers

Take emotion out of the equation by monitoring on an ongoing basis the compensation of your talent to identify and action any discrepancies. Research shows that 25% of Companies5 are not regularly tracking this data. In addition, we all want to attract the very best talent to our organization, over 90% of potential candidates will choose to work for an employer that publically states they pay equally.

 

3. Be aware of the “Breadwinner” bias – seek a challenger for your pay decisions

Have you ever awarded a higher pay rise to a man because you knew they were the sole income earner of the family? I know this is a hard question to answer no to truthfully. A solution could be to benchmark and seek input and challenge from peers and HR. When comparing multiple data sets, unconscious biases are mitigated and decisions based on fact and proof.

 

4. Review your reward policies to ensure fairness in remuneration practices

HR policies are the building blocks of how we manage the hire to retire cycle of our employees, often they can be: written, published and then set in stone. I encourage you to review these policies and practices to ensure there is fairness in all remuneration and recognition procedures. Be transparent with your workforce, clearly stating what you value and recognize, and how they will be assessed and rewarded. This ensures everyone has the tools and knowledge at their fingertips of what it takes to “get on”.

 

5. Become an EQUAL-SALARY employer

Finally, and most importantly, “Talk the Walk” – by becoming an EQUAL-SALARY employer. Every company and culture has a different approach to how they talk about salaries, for some it is taboo and others a dinner party conversation topic. The key is to recognize and understand where are the gaps (for top earners the gap is higher than low earners – 20% vs 5%7) and put in place process interrupters (e.g. user salary grid when discussing promotions) to permanently ensure we are proactively and objectively rewarding and promoting the men and women who deserve it.

Through these micro-actions every one of us can ensure Santa arrives on the same day for everyone.

 

PwC are partners with the EQUAL-SALARY Foundation – certifying companies that pay men and women equally around the globe.

 


Source

1http://bpw.ch/en/Politics/Equal-Pay-Day

2http://www.europarl.europa.eu/news/en/news-room/20170203STO61042/gender-equality-time-to-close-the-gap

3http://ec.europa.eu/justice/gender-equality/files/womenonboards/factsheet_women_on_boards_web_2015-10_en.pdf

4 https://rework.withgoogle.com/guides/pay-equity/steps/structure-your-pay-process/

5http://www.fawcettsociety.org.uk/policy-research/the-gender-pay-gap/?gclid=CjwKEAjwq5LHBRCN0YLf9-GyywYSJAAhOw6m7Ktl04l0_tK2GcqmxhlGIAgszYn5npUvYSPqcNzXVBoCg4Dw_wcB

6 http://www.pwc.com/gx/en/about/diversity/iwd/iwd-female-talent-report-web.pdf

7 http://www.equalpayportal.co.uk/statistics/

Assess your organisation’s Diversity & Inclusion program with PwC

We know that Diversity and Inclusion (D&I) is good for business. Organisations that invest in D&I report seeing a number of advantages, such as an increased ability to attract talent, greater innovation and improved financial performance.

At PwC, we’ve found that the most effective D&I programs are comprised of four dimensions:

  • Understanding the Facts of Today
  • Building an Inspirational Strategy
  • Equipping Leaders for success
  • Creating Sustainable Movement

Take our short survey to assess your organisation’s Diversity & Inclusion program

Our new survey enables you to self-assess your maturity across those dimensions.

Click here to take our short survey and get your personnal Inclusion & Diversity assessment

The survey is short and easy to use, and when you finish the survey, you’ll receive an assessment of where your program is strongest and where there are areas of opportunity, as well as providing a benchmark of how you compare to others in your region and industry.

Take our short survey and get your personnal Diversity & Inclusion assessment

For more information on interpreting the results for your organisation or advice on how to become more Diverse and Inclusive, please contact Sue Johnson:

Sue Johnson
Senior Manager, Inclusion & Diversity, PwC Geneva
sue.johnson@ch.pwc.com / +41 58 792 90 98

Winning the fight for female talent: How to gain the diversity edge through inclusive recruitment

Gain the diversity edge through inclusive recruitment

Today, more and more CEOs regard talent diversity and inclusion as vital to their organisation’s ability to drive innovation and gain competitive advantage. And as businesses across the world inject greater urgency into their gender diversity efforts, we’re seeing an intensifying focus on hiring female talent. In fact, 78% of large organisations tell us they’re actively seeking to hire more women – especially into more experienced and senior level positions.

PwC’s new report, Winning the fight for female talent, explores how organisations are seeking to deliver on their gender diversity attraction goals. We also examine the impact of these approaches and – more generally – how they’re matching up to the career aspirations and diversity experiences and expectations of the modern workforce.


Download the full report here.

 

Steady progress in boosting female economic empowerment, but gender pay gap still a major issue

PwC Women in Work Index

Prize of pay parity in OECD could mean US$2 trillion increase in total female earnings

Latest PwC Women in Work Index reveals:

  • Gradual improvement in female economic empowerment in OECD
  • Nordic countries still lead the way, with Iceland, Sweden and Norway taking top 3 spots
  • Poland climbs into top 10 thanks to gains in cutting female unemployment
  • Other top 10 places held by New Zealand, Slovenia, Denmark, Luxembourg, Finland and Switzerland
  • But gender pay gap poses major challenge, with parity still decades if not centuries away
  • Potential prize of closing the gap could boost total female earnings by US$2 trillion

21st February, 2017 – Slow but steady progress continues to be made in OECD countries towards greater female economic empowerment, according to a new PwC report.

But the gender pay gap continues to be a major issue, with the average working woman in the OECD still earning 16% less than her male counterpart – despite becoming better qualified.

The latest PwC Women in Work Index, which measures levels of female economic empowerment across 33 OECD countries based on five key indicators, shows that the Nordic countries – particularly Iceland, Sweden and Norway – continue to occupy the top positions on the Index. Poland stands out for achieving the largest annual improvement, rising from 12th to 9th. This is due to a fall in female unemployment and an increase in the full-time employment rate.

PwC analysis shows that there are significant economic benefits in the long term from increasing the female employment rate to match that of Sweden; the GDP gains across the OECD could be around US$6 trillion.

pwc_infographic

When it comes to closing the gender pay gap, countries such as Poland, Luxembourg and Belgium could see the gap fully close within two decades if historical trends continue. But much slower historical progress in Germany and Spain means that their gap might not close for more than two centuries, although making this a policy priority could accelerate progress. The gains from achieving pay parity in the OECD are substantial – it could result in a potential boost in female earnings of around US$2 trillion at today’s values.

Picture1
Download the full report here.

 

Contacts:

Hans Geene
Partner
+41 58 792 9124
hans.h.geene@ch.pwc.com

Charles Donkor
Partner
+41 58 792 4554
charles.donkor@ch.pwc.com

New report: PwC’s 20th Global CEO Survey – Harnessing the power of human skills in the machine age

The talent challenge: Harnessing the power of human skills in the machine age

pwc_ceo survey_2017

With the rise of automation, we’ve reached a point where we’re questioning the role people play in the workplace. How to achieve the right mix of people and machines in the workplace is the critical talent question of our age.

Fifty-two percent of CEOs say that they’re exploring the benefits of humans and machine working together and 39% are considering the impact of Artificial Intelligence on future skills needs. This is a delicate balancing act for CEOs in every sector and region.

However, you can’t have a machine age without humans and 52% are planning to increase headcount over the next 12 months. They are focused on obtaining the skills that they need to create a world where humans and machines work alongside each other.

Different skills will be needed, roles will disappear and others will evolve. Some organisations will need fewer people, but others will need more. There will be a rebalancing of human capital as organisations adjust.

Exceptional skills and leadership will be needed, and yet 77% of CEOs say they see the availability of key skills as the biggest business threat. Todays in demand skills are exclusively human capabilities – adaptability, problem solving, creativity and leadership. Software cannot imitate passion, character or collaborative spirit. By marrying these skills with technology, innovation can thrive and organisations can succeed in competitive market places.

CEOs have an enormous challenge ahead of them; it is the role of business leaders to protect and nurture their people to show that in the technological age, humans are their priority.

Our new report – The talent challenge: Harnessing the power of human skills in the machine age – looks at the dilemmas facing CEOs and their HR teams in today’s environment and how their businesses can stay ahead.

Picture1
Download the full report here.

 

Contacts:

Hans Geene
Partner
+41 58 792 9124
hans.h.geene@ch.pwc.com

Charles Donkor
Partner
+41 58 792 4554
charles.donkor@ch.pwc.com

PwC & HR Today Survey “Future of work”

Your chance to win a prize: invitation to take part in the survey

 

To the survey

 

PwC has joined forces with HR Today to present a series of studies entitled HR Today Research. The aim is to foster dialogue with the professional HR community and encourage people to participate in the HR-specific survey. Take part and you could win a night for two in one of the five star hotels in the Victoria Jungfrau Collection.

The study results will be published in the spring of 2017 via the channels of HR Today and presented at an event.

More information can be found here.

Young Workers Index 2016

Every person is born with potential: the key is unlocking that potential. So, how can we provide opportunities that empower young people to take ownership over their own future outcomes?

You can download our new Young Workers Index report by clicking below, where we discuss how governments and businesses can reap the rewards from playing their part in making this happen. You can also explore key findings from the research and use our new interactive tool to delve deeper into the data below.

 

Download the report

The PwC diversity journey

Creating impact, achieving results

For PwC, diversity is a priority across our network of firms because we need the best available talent to create value for our clients, people and communities. We hire and nurture professionals who take a variety of approaches to problem-solving, who are willing to challenge the status quo, who think differently from one another, and who come from many different backgrounds and cultures. We do this because to solve important problems we need diverse talent.

Our global diversity journey began 12 years ago, when the PwC network of firms first began to focus on a globally consistent approach to diversity as a business imperative and enabler for delivering our international business strategy. A lot has changed in the intervening years, particularly with regard to the decision-making that drives the operationalisation of our network approach and strategy. Through this journey we have arrived at the approach and PwC D&I story that we share with you in the report ‘The PwC diversity journey’.

Capture_Diversity

Explore our full The PwC diversity journey: Creating impact, achieving results report to learn more about the PwC approach to diversity and inclusion, the progress we’ve made, and the lessons we’ve learned along the way.

To find out more, visit: pwc.com/diversityjourney