During the previous decade, hkp/// group has analyzed compensation levels and structures of executives in a variety of countries around the globe, revealing highly relevant international compensation trends: Over the last years, compensation levels of top and middle managers (hkp/// Executive Levels 8 to 10) in BRIC or developing countries have been catching up compared with compensation levels in Europe. For example, looking at target direct compensation, Top Executives in China already see considerably higher compensation amounts than their colleagues in Europe. They are even starting to close the gap to Top Executives in the USA, who remain at the top of the international compensation ranking (see Figure 1).
Fresh insights from the hkp/// group GEN survey reveal fascinating similarities in executive compensation across the globe – like a relatively small impact of company size – but also intriguing country-specific singularities, such as the particular effect of age and seniority in executive compensation e.g. in Germany and France.
Petra Knab-Hägele, Senior Partner hkp/// group
This trend also holds for Brazil, although not to the same degree: Top Executives here still fall somewhat behind their international colleagues but have seen a significant increase in executive compensation levels during the last years. Meanwhile, companies in other parts of the world, like in Saudi Arabia, pay their executives comparable compensation levels as companies in Europe.
Fig. 1: Average target direct compensation per hkp/// Executive Level in top and middle management for selected countries worldwide (in k EUR)
While monitoring compensation developments is always helpful, investigating the drivers of compensation reveals a differentiated view on country specifics:
- Which factors drive executive compensation locally and to which degree?
- How big is the influence of job features (job grade/family), personal characteristics (age, gender) and company specifics (company size, business sector, other company specifics) on compensation levels?
This flyer sheds light on these questions and shares the latest hkp/// group compensation insights. Using them, companies cannot only better understand what influences compensation, but also start to do similar analyses within their organization and benchmark results with international market data provided by hkp/// group.
Compensation drivers Germany
Core of the hkp/// group approach are state-of-the-art econometric analyses, more specifically: multivariate regression analyses. These statistical analyses allow to quantify with great precision to what degree drivers like job grades, age or industry sector explain why some executives earn more than others. The results of this analysis are shown in Figure 2 for selected countries worldwide.
In Germany, probably not surprisingly, the job grade is the most important determining factor of executive compensation, accounting for 57% of the compensation differences between German executives. Interestingly, the importance of the job grade has increased during the last five years, suggesting that job evaluation systems are used more systematically today than several years ago.
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