Dusseldorf There was great excitement at the SAP employee meeting at the end of January. The question was how big the salary increase would be for the approximately 24,500 employees in Germany. The speculation in the workforce overturned, after all, the board had indicated generosity in an internal e-mail. “Expectations were high,” said Andreas Hahn, works council member and product expert for industry standards and open source at SAP.
But Hahn and many of his colleagues were disappointed. There will be an average of 2.7 percent more in 2022. The salary increase is thus below the inflation rate, in Germany prices rose by 3.1 percent in the previous year. In addition, the workforce had only received an increase of 1.2 percent in 2021.
At the time, the SAP management justified the restrained increase with the uncertainty caused by the corona pandemic. But business was going well in 2021, and the operating result exceeded its own expectations at 8.41 billion euros. In internal chats and discussion forums after the staff meeting, remarks such as “outrageous” or “disappointing” were reported by Hahn. “There was a clear sense of disillusionment,” says Klaus Merx, head of the works council.
This outrage may break out in the upcoming works council elections. For SAP, where the unions have so far had little influence and there is no collective agreement, this could be a turning point in the company’s history.
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However, Germany’s head of human resources, Cawa Younosi, rejects the criticism of the amount of the salary increase in relation to the Handelsblatt. In total, SAP is investing more in German employees than ever before, a total of 50 million euros. For every new euro spent, 48 cents would flow into employee remuneration – “a record value”, according to Younosi.
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In principle, SAP’s salary structure is less geared towards compensating for inflation than towards rewarding performance. There is a share program, and most of the salary increase budget of executives can be distributed among employees in different ways. “It’s a clash of different philosophies,” says Younosi, referring to the unions.
Unions can gain
For these, Merx now expects noticeable gains in the works council elections in a few weeks: Verdi is committed to an in-house wage agreement, and IG Metall to a central wage agreement. “They could book up to a third of the seats for themselves,” says the chairman of the works council.
The 59-year-old is less self-conscious than one might think. After 16 years, Merx no longer stands for election, he wants to go back to software development. He is committed to co-determination and is grateful for strong employee representation. But: “I have not yet been convinced that I will join a union,” says Merx.
The software engineer and chairman of the SAP works council does not belong to any employee organization. At the next works council election, he predicts significant gains for unions.
(Photo: Klaus Venus)
So far, unions have had little say at SAP. A works council was only established in 2006, and only eight of the 43 members identify with Verdi and IG Metall. Quite a few employees see themselves as IT experts in a special role and have great reservations about unions.
However, Türker Baloglu from IG Metall is already seeing the first signs of change. The union has gained many members and the circulation of the weekly newsletter has doubled. However, the official does not want to give any specific figures on membership, but speaks of a “low level”.
Not everyone gets the raise
Due to the lack of union representation, there is no collective agreement at SAP. The board can set many components of pay—both the size of the raise and how it is distributed. Only 40 percent of the increase that has now been decided will go to the 24,500 German employees. For the remaining 60 percent, the respective managers decide how they are distributed across their department or team.
That puts quite a few managers in a dilemma: If they want to promote top performers or young talents, they have to give less to others. A logical approach from the point of view of the group: performance is rewarded. From the point of view of some employees, however, things look different: They receive less than the promised 2.7 percent.
The HR director at SAP sees a “clash of philosophies” with the unions.
(Photo: SAP)
Head of HR Younosi refers to other salary components such as “SAP Move”. The group issues shares to employees for a total of 250 million euros, of which around 33 million euros go to German colleagues. However, only half of the workforce receives shares, and it is also a one-off payment.
Low turnover
A lot is at stake for SAP. There is a great shortage of skilled workers in the IT industry. In order to attract and retain talent and young people, the group has to come up with some ideas. This is one of the reasons why the “Early Talents” receive significantly more at 6.75 percent.
Head of HR Younosi proudly points to the highest levels of employee satisfaction, the record number of external applications and the low fluctuation rate in Germany, which is 1.5 percent overall and 2.5 percent for young employees. At other tech companies, these rates are in the double digits. “So there can be no talk of panic,” says Younosi.
SAP also comes up with some ideas to persuade employees to stay: Lunch and coffee are free, as are gyms and saunas. In times of Corona and working from home, that counts less – just like the usual company car.
With the low fluctuation, SAP benefits from its rural location in the Rhine-Neckar region – far away from many other IT companies. If you want to change, you have to sell your house and move or commute far. EDS and IBM in Stuttgart are the closest, but are still an hour and a half away by car.
The former employee representative on the supervisory board, Hahn, sees the employees in a dilemma – and fears for the work ethic. “There will be an inner resignation.”
More: SAP exceeds annual targets – cloud business grows above average