Offical Partner
12.12.2007 | Christian Cahn von Seelen
The raging debate on management salaries - Germany vs. Japan
In a very German debate, the question of the "just" payment for managers has been brought up between the political parties. While the social democrats go so far as to suggest fixed upper limits, even the ruling conservatives are inclined to agree on taxation measures to cut severance payments.
Interestingly Japan is repeatedly brought up in the discussion as an example for an alternative approach. While in Japan the multiple between management and normal employees' salaries is only around 20, in countries like the U.S. or even Germany the multiple is well beyond 40, in some cases in the four-digit area. As an example the Porsche CEO earns 50 Mio Euro, more than 1000 times as much as an average employee in his company. While Porsche is a successful company, in the case of Citigroup a 140 Mio Euro severance is of course raising even more discussion.
Based on our experience, we at PQ+ see quite some parallels between the traditional German Mittelstand and the Japanese approach. The focus is on the benefit of the company, not on that of individual managers. Long time orientation and the traditional German "Sparsamkeit" made most company owners in spite of owning multi-million German Mark companies lead a comparatively “normal” live, surely compared to the lavish lifestyles of many of today’s top earners.
Integrity and transparency forms the base of every salary system. In this respect the many cases of abuse and fraud in the past months have surely paved the way for such a heated debate. Legal restriction or tax interventions however will not be a solution, rather provoke more creative approaches to securing ones' advantages.
Archieved under: PQ+ Internal