The European Business Club recently released the results of a salary survey designed to help members assess the compatibility of their compensation packages. Their senior economist, Claire Coutin, goes through the research methods and the results for The Leader.
Everyone is quick to criticize salary surveys because the results are too high, too low, or not specific enough. In other words, they are just not what people want to see. In response to the need for more detailed research, the European Business Club (EBC) has surveyed member companies and performed size-specific and sector-specific analysis of compensation packages.
The EBC conducted its first salary survey in the fall of 2000 at the initiative of its human-resources committee, aiming to provide our member companies with a free, simple and practical instrument that would help them with their salary policies.
This year, the structure of the survey remained the same as in the previous year: It includes the participant’s profile, salary practices, salary increases, benefits, compensation data for 21 positions, and an analysis both by size and by sector of activity. In addition, this year a new expatriate package contained information related to the salary practices and benefits provided to expatriate employees.
Perhaps the most valuable feature of the survey is the section containing the size and diversity of our sample base. Ninety-two companies participated in the survey this year, representing 2,951 employees. Last year’s survey had 77 participants, for a total of 2,136 employees.
Clear identification of the companies participating in the survey was central to avoiding confusion when analyzing the figures. It also helped the companies with a point of reference when facing the final results. When compared with other salary surveys, the overall results provided by the EBC Salary Survey showed somewhat lower compensation figures (see table 1).
Part of the reason may be a significant percent of representative offices (see chart 2), which have certainly influenced the results of the survey. Small companies (less than 20 people employees) and medium-sized companies (up to 100 employees) were most active in responding to the survey (70 percent of responses). No doubt, this has had an impact on the results.
In line with the recovering economy, as well as the progressively improving political relations between Russia and Europe, the survey revealed that European companies are increasing compensation and benefit packages compared to last year.
Although more of the companies surveyed state salaries in rubles than in 2000, the level is still at around 23 percent. When it comes to paying salaries, however, 74 percent of companies pay their employees in rubles.
This year, more companies deposited sala-ries to their employees’ bank accounts: 18 percent of companies pay employees in cash, while the rest use bank accounts. Another interesting observation is related to salary increases. This year, half the companies adjusted salaries to reflect cost of living, proving that more are starting to take inflation into account.
Benefits packages provided to local employees include medical coverage, individual pension plans, loans for purchase of automobiles and/or housing, company cars and reimbursement of car-related expenses and meal allowances, among others. The number of companies providing benefits has increased, as much as 20 percent for certain types of packages.
Russian professional practice, as well as the mindset of employees, is still far behind the West when it comes to individual pension plans, one of the important topics addressed at monthly breakfasts organized by EBC’s HR committee. Progress is being made, however, and now about 13 percent of the companies surveyed provide their employees with such benefits. It is interesting to note that this year’s figure is two-and-a-half times higher than that of last year. As far as other benefits go, 87 percent of European companies working in Moscow provide medical coverage to all their employees. In a trend returning to pre-crisis standards, meal allowances or cafeteria access are provided to all employees by 72 percent of respondents in 2001, compared to 65 percent in 2000.
Some companies offer additional benefits, such as auto and housing loans, company cars or mobile phones to certain employees. Even in this category, we noticed a slight increase, with company cars provided for employees by 70 percent of the companies, as compared with 65 percent last year.
We also noted an increase in total direct compensation provided to Russian employees in Moscow. It rose from 4 percent to more than 50 percent for some top-management positions. It appears that this increase is, for most positions, mainly related to an increased ratio of bonuses to total direct compensation, rather than an adjustment in the gross annual salary.
Partly for this reason, the increases are more visible for professional staff, especially in marketing and sales, than for administrative staff. For example, sales directors showed an increase of 56 percent in terms of total direct compensation and a 42 percent increase in annual gross salary. The next-most-significant increase was observed for marketing directors, with increases of 32 percent and 20 percent, respectively, followed by that of IT department heads, with a 26 percent increase of total direct compensation and 16 percent of annual gross salary.
The results of our survey also demonstrated wide divergences in salaries; however, the special structure of the EBC survey provides at least a partial explanation for this, in addition to the usual assumption of black salaries. It reflects the diversity of our sample, but also the reality of labor market prices. The fact that bonuses are starting to play a more important role in compensation packages contributes to the wide scale of variations.
This high level of variation reflects varying levels of responsibilities specific to each sector for a particular position. This is the case for positions such as managing director, marketing director, lawyer, chief accountant and translator. For example, the average annual gross salary of a lawyer in the services sector is about $62,000, but only $25,000 in the industrial sector.
This year’s sector-based analysis once again showed that the banking sector, along with pharmaceuticals and consulting companies, provides the highest salaries. Industrial-production and construction-company salaries are on the low end of the scale.