HUMAN RESOURCES

Why international firms pay more

In our practice as an HR consultancy firm, we execute for our clients many salary benchmarking surveys. We do these surveys for both international companies as well as Slovak companies. On average, international companies (as well as modern, young Slovak firms) pay their employees 35% more. For individual job categories, the differences can be even bigger: HR professionals earn 50% more at international companies than at Slovak companies!
In the surveys, we thouroughly examine differences in job profiles, job descriptions, levels of competence, output of the job holder, his or her individual profile (skills, experience, education, personality etc.) and many other items which have an influence on the level of salaries being paid. Here are some of our findings:


Gerard Koolen

In our practice as an HR consultancy firm, we execute for our clients many salary benchmarking surveys. We do these surveys for both international companies as well as Slovak companies. On average, international companies (as well as modern, young Slovak firms) pay their employees 35% more. For individual job categories, the differences can be even bigger: HR professionals earn 50% more at international companies than at Slovak companies!

In the surveys, we thouroughly examine differences in job profiles, job descriptions, levels of competence, output of the job holder, his or her individual profile (skills, experience, education, personality etc.) and many other items which have an influence on the level of salaries being paid. Here are some of our findings:

Longer working hours

Employees at international companies spend more time at work than their colleagues at Slovak companies, and they seem to work more during the day. For example, on the production floor, operators at international companies seem to have less time for small talk during working hours with colleagues, smoking cigarettes etc. than operators at Slovak firms. An average financial director at an international company spends between 10-12 hours a day at work. At local companies, the financial director tends to spend 8-9 hours at work. The biggest differences we measured were with auditors during the busy season. Whereas "international" auditors work on average 80 hours per week, local auditors do not work more than 48 hours during the same busy season.

Higher output

Productivity at international companies seems to be higher than at traditional Slovak companies. Among other reasons this is because of the implementation of modern HR policies and new production techniques (including the implementation of quality systems) which simply do not tolerate inefficient or low output and strongly stimulate efficiency from the individual employee. We also found that international companies are more profitable than traditional Slovak companies. It is obvious that profitable companies can pay higher bonuses and extra premiums than companies in loss.

More responsibilities

Decision making power at traditional Slovak companies is still very centralised and in many cases the General Manager is involved directly in 90% of all decisions taken in the company. In several cases, even, the shareholders make most of the decisions, which thus makes the General Manager and his team mere executors of given instructions. Obviously, this has a negative effect on a company's productivity and on individual salaries. Managers at international companies not only have more decision making power, but even more, it is explicitly expected that they will show initiative. They tend to be able to decide independently on big investments, they have greater freedom in hiring and firing of employees etc. This also results in higher salaries.

Salary policy

The managements of international companies frequently ask themselves whether they are underpaying their people. The last thing they want is to pay salary levels which are (significantly) under the labour market level, as this can result in high turnover of employees. Further, they examine how to pay well-performing employees more money to reward and stimulate them to become even better than they are, and to show the under-performers that improvement of their work has immediate impact on their salaries, which thus gives them a strong financial motive to increase their output.

At traditional Slovak companies, we see the opposite. Bonuses are paid reluctantly and salaries are kept as low as possible. If salaries donşt attract qualified new recruits, the companies tend to decrease their requirements and not increase the salary level in order to attract the necessary skill-level.

Gerard Koolen is a partner at Lugera & Maklér. His column appears monthly. Send comments or questions to gerard.koolen@lugera.com.

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