Remuneration: how much flexibility do you want?

Vinciane Istace, people, experience & change leader and diversity & inclusion leader at PwC Luxembourg. Library picture: Mike Zenari

Vinciane Istace, people, experience & change leader and diversity & inclusion leader at PwC Luxembourg. Library picture: Mike Zenari

On 31 January, PwC Luxembourg will hold its first webinar as part of new ESG event series taking place every two months. The first focuses on new ways of working and how ESG will transform remuneration models. Partner and diversity and inclusion leader Vinciane Istace tells us more.

In its 2022 annual review, PwC Luxembourg examined the inclusion and diversity initiatives taking place in the firm. Although three-fourths of employees were satisfied with actions taken in this area, the firm noted “we still have to take actions to reduce the gender diversity gap by management level in order to reach a 40-60 balance”--a goal it has written into its 13 priority ambitions.

PwC has taken a data-driven approach when it comes to diversity and inclusion, including with its gender pay gap dashboard, which allows a company to identify not only internal gaps but also to benchmark against an appropriate sample (for example, at the sector-level). The tool, developed by Geneva University and the Federal Office for Gender Equality of Switzerland, is certified by the European Commission, as well as Luxembourg’s ministry of equality between women and men.

“It’s a statistical methodology, not a simple calculation of percentage, and based on correlation [among] five criteria,” the firm’s Vinciane IstaceVinciane Istace explained. Data is collected and processed on an anonymous basis through the tool. 

The five criteria include academic background--“because it will imply that you may enter into the labour market at a different moment and that you may be compensated in a different way,” Istace added--professional position (function, grade), experience (number of years working), seniority (number of years working in a company) and responsibility level (whether there’s managerial aspects to a role).

Professional position matters

One of the five criteria in particular that can weigh more heavily on the gender pay gap, Istace explained, is the professional position which impacts the gender gap, not just the pay gap.

“Most of the gap we’re observing will be due to the demographic imbalance between men and women and due to the fact that higher responsibilities will lead to higher remuneration. And if these higher responsibilities are in the hands of more men than women, then this will [have an impact].”

For 2022, of the employees eligible for an evaluation cycle, 21% of women and 26% of men at PwC Luxembourg were promoted to the next grade (564 overall). As the firm notes, “Even though the ratio in promotions varies by small percentages (between 3% and 9%, to the detriment of women), we still see that for certain positions, like senior manager (10% of women against 22% of men), the gap continues to exist.”

New ways of remuneration

Its own self-evaluation in gender-specific pay gap showed an increase over two years to -1% (compared to -0.3% in 2020). This figure, however, should be put into context at the broader Luxembourg and even EU levels: in 2020, gross hourly earnings for women were -0.7% below those of men, on average--the smallest in the EU (which had an average of -13%).

Istace has previously called for “pressure on the system” to improve top-level balance, i.e., on boards. (It’s worth noting that an upcoming 10x6 event, hosted by Paperjam + Delano Business Club, will focus on just that.) 

But the discussion around new ways of working, such as an increased demand for teleworking, also bring forth questions on what employees value. 

“There’s a shift that is on its way, in the sense that there are two forms of ‘money’ people are eager to receive: the cash and the time,” Istace added. “So the remuneration policies should be able to turn a monetary proposition into a time proposition. How much flexibility do you want?”