“When we engage with other companies or partners, there is unanimous agreement on the importance and necessity of paying a living wage. The challenge, however, is obtaining accurate living wage benchmarks globally and internal remuneration data. Companies must standardise their data and establish unified principles to measure living wages,” says Franziska Koenig, Head of Accenture’s Rewards/Recognition/Performance (Europe, Middle East, Africa).
WageIndicator interviewed Franziska Koenig from Accenture to delve into the organisation's living wage journey, exploring the challenges encountered and their vision for the future.
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| Franziska Koenig |
Could you please start by explaining where the living wage fits into your broader sustainability agenda?
Since 2008, Accenture has publicly committed to follow the ten principles of the United Nations Global Compact, supporting sustainability, equality, and human rights. We have a code of business ethics that embeds these human rights principles, which every Accenture employee is regularly trained on and signs up for. These human rights principles are also an integral part of our talent strategy, including our commitment to pay all our people a living wage or more.
Human rights are embedded in our sustainability agenda and to our responsible buying strategy, impacting whom we work with and how we work together. We have supplier standards of conduct referenced in all purchase orders, buyer programs, and the supplier selection process. This standard strongly encourages our suppliers to pay a living wage or more to their employees providing services to us. Additionally, we have embedded these standards in our newly built supplier hub, which is live in more than 50 countries, capturing ESG commitments of our suppliers and helping them track progress.
For our own operations, we have a compensation culture and people committee that oversees all our strategies related to people, including pay equity, living wage, inclusion, diversity, leadership succession, and culture. This robust governance framework ensures we meet our ESG commitments and reflect progress effectively.
You have been working on a sustainability agenda since 2008, why did you choose to work on living wages in 2018?
We have been learning along the way with our partners. In some of our countries, we've already started working on the topic of living wages. For example, in the UK, we achieved accreditation as a living wage employer before 2018. This early adoption raised broader awareness of the importance of living wages.
In 2018, we started implementing the living wage in about ten key countries, where most of our headcount is and where we have specific roles more exposed to cost-of-living changes. This helped us build understanding and awareness of what a living wage means, that is, ensuring a decent standard of living without reliance on government assistance or specific programs.
In 2019, we began rolling this out globally. With WageIndicator’s robust living wage data, we have been able to expand our efforts effectively. Your partnership has been crucial in helping us understand and implement these standards.
We've clearly been on a journey, learning about what distinguishes a living wage from other concepts. Even today, we need to regularly educate our organisation and partners about how living wages differ from legally required minimum wages and other concepts such as median wages. Accenture’s leaders at all levels of the organisation are frequently being reminded about the challenges our people face, about taking social responsibility and about stewardship, which has been critical to our living wage commitment. We run regular awareness campaigns and training internally to sustain our commitment to paying a living wage across the organisation and offer multiple support channels addressing questions about living wage real time or in the form of frequently asked question documentation.
What is your stance on the EU Directive on Adequate Minimum Wages?
We are closely monitoring the new EU directive. The definitions around what constitutes an adequate wage need to evolve, and we are curious to see how this will be incorporated into country-specific legislation. Currently, it's a vague construct. I'm confident Accenture is well prepared to incorporate the new directive and meet its requirements given that we have already implemented the living wage as our minimum benchmark and have robust pay equity practices.
How many people were paid under the living wage threshold in Accenture? Do you know?
In our company, most of the jobs our people do for our clients are highly specialised and well above the living wage. However, there are areas in our business, particularly in business process outsourcing, where the average market salary, which serves as an anchor point for us, is close to or even falls below the living wage. That's where we've focused our efforts immediately.
Could you tell ushow many people you had to adjust for living wages?
We operate with ~750,00 people worldwide in more than 50 countries. On average, we adjusted living wage incomes for about 10k to 20k people. iThe number of people we need to address for living wage gaps every year has reduced as we review this quarterly. Currently, it's only a handful, unless there is a significant change in living wages. Over the last two or three years, inflation has been trending very high across Europe and the U.S., which has led to broader groups of people needing adjustments.
Once you receive the living wage data from WageIndicator, what steps do you follow to implement it?
We then share this data with our country teams in the more than 50 countries where we operate, and we let them review and validate it. As you know, living wage data trends can sometimes fluctuate, so we maintain a robust internal benchmark target without adjusting it too frequently. That's why we sometimes come to WageIndicator to discuss observed trends, their robustness, and how we should interpret them. We want our country teams to validate these living wages, using other local government statistics and sources to corroborate the cost breakdowns for food and non-food items that you provide.
This review process is crucial because it helps our teams understand what living wage means and fosters buy-in and advocacy. We want our country teams to fully embrace the concept of a living wage. After their review, the countries confirm whether we need to update the previous benchmark. They might also identify additional cost of living components to include.
Since we are a white-collar company, many of our employees live in the capitals of their respective countries, where the cost of living is higher. Therefore, some of our countries have internal benchmarks that are higher than WageIndicator’s estimates. In some countries, they came back with valid insights, and we confirmed together that their benchmarks might be slightly higher than the WageIndicator. However, the market data we receive from WageIndicator serves as our absolute minimum.
What are some common challenges you face while implementing living wages?
Some challenges result from different external benchmark data. Our approach is to pay our people a salary that is market-relevant for their role, skills and level in a local market. The standard salary benchmarking data basically provides you with what, on average, a certain industry or competitor set is paying for a job. We have certain jobs where those ‘market salaries’ fall below living wages. This is exactly the discussion of what forms an adequate wage. It just indicates that the living wage isn't broadly implemented yet in the market. Many competitors are still paying below that for particular jobs. This is the education we sometimes go through with our own HR and business teams when they ask us why our competitors are paying lower than we do or can offer a lower rate to our clients.
Once our countries validate the living wage benchmark, we use a central tool for gap analysis, which our teams use to assess benchmarks, track trends, and run analyses. Accenture has good visibility into remuneration data, allowing us to quickly gather salary, bonuses, benefits, and all components considered as living wage income for over 50 countries and 750,000 people, typically in a few hours. Occasionally, data errors need fixing. Once gaps are confirmed, we discuss the timing to close them. If only a few people need adjustments, such as hires below the living wage or acquisitions, they will be addressed in the next paycheck, usually within a month. Living wage benchmarks are embedded as a minimum in our salary ranges, hiring points, and mobility services.
Another example of challenges we face: Accenture is also actively acquiring companies in new skill areas to enter the market. During these acquisitions, we help the target companies to review their data to ensure that their employees' salaries align with Accenture's living wage commitment when integrated. Whilst this commitment is ingrained in our target acquisition review process, though we often face challenges regarding visibility into remuneration data and ensuring living wage compliance in the acquired companies.
As you proceed on this journey of implementing living wages, how do you navigate bonuses, allowances etc.?
We are only considering fixed monthly cash as living wage income. That means, it shouldn't be variable, not dependent on any sort of performance or productivity outcomes. It has to be something that people can count on. Base pay is a common component for all countries. In terms of other fixed cash components, some countries provide cash allowances, for example, meal allowances. These are in lieu of base pay because they are more tax beneficial for our people. So we allow that to be included when we compare it to living wage, as long as it's in cash.
So, would you say that as a company, you prefer global implementation rules over national ones?
Yes, definitely. For multinational companies, like Accenture, it is important we have a common understanding and measurement of living wages globally to not disadvantage people. Remuneration components which you consider for a living wage income can vary by country or by location. India, for instance, is vast, so we might have location-specific allowances for meals or transportation. Nevertheless, the principle of whether we allow these inclusions remains globally consistent.
As you mentioned, if we strive for common and clear principles for the benchmark itself, then the counterpart, the living wage income, should also be principle-based and not vastly different. At Accenture, we are fortunate to have globally consistent access to our remuneration data. This visibility allows us to easily compile, analyse, and pinpoint gaps.
Even with different types of employee contracts, such as project-based or piece-based work where working hours are not always visible, living wage remains our foundational commitment and expectation. However, ensuring that living wages are consistently paid can be complex, especially when collaborating with partners or acquiring other companies.
Do you pay your interns/trainees a living wage?
We haven't mandated that yet. We are recommending it and letting the countries review it where it makes sense. For the most part, where we have larger apprentice programs, they are paid a living wage as well. We have run these checks. It depends a little on the setup of these contracts. So, again, we haven't mandated it yet, but it is part of the reviews.
What and how do you report on your living wage progress?
Internally, we track the confirmed living wage benchmarks that our countries have validated and we monitor the gaps in headcount and costs.
Externally, in our public disclosure, we currently do not provide detailed metrics. We may consider doing so in the future. Currently, our public disclosure includes a statement affirming our commitment to paying 100% of our people a living wage or more.
How can we enhance the precision of living wage reporting to facilitate meaningful comparisons of company performance?
We need a joint understanding of the living wage definition and a common methodology that everyone uses and agrees on, along with standards for living wage benchmarks. This is crucial for helping companies implement this and is part of the pay transparency trends.
The new EU legislation on Transparency, Adequate Minimum Wages, and Corporate Sustainability Reporting, presents an opportunity to also drive the standardisation of living wage definitions and benchmarks.
When we talk to other companies or partners, everyone agrees that paying a living wage is important and the right thing to do. The struggle, however, lies in accessing the right living wage benchmarks and internal remuneration data across the world. Companies need to standardise their data and establish common principles. While there's still some way to go, the new EU legislation could help accelerate this progress.