A lot is written about executive compensation. Also about benefits for employees. But when a company talks about incentives, it either targets the top floor with stock programs and clawback clauses, or it targets the workforce with non-cash benefits and meal allowances. What lies in between often falls out.
This group is large. Dr. Matthias Fifka, scientific director of several studies, assumes that there is one top management position for every 20 to 30 positions in middle management. The Dr. Jürgen Meyer Foundation itself, which carries out studies, describes the group as “neglected people in the German economy” in its study “Middle Management – Leadership in Times of Massive Upheaval”. This has unpleasant implications for the question of remuneration. The largest management group in terms of numbers is usually the one whose incentive system is the least well thought out.
Burnout risk in middle management: Studies show 18 percent of those affected in Germany
The sandwich position can be measured. A study by Kühne Logistics University Hamburg has quantified the connection between hierarchy level and burnout risk. 580 managers were surveyed in a first wave and 154 in a second. The result: the higher someone is in the hierarchy, the lower their risk of burnout. The mechanisms behind it: control and self-efficacy. Both grow with the hierarchy and are structurally weaker in middle management.
Seth Prins, an epidemiologist at Columbia University in New York, came to a similar picture in 2015. He evaluated the health data of 22,000 employees. Among employees without managerial responsibility, 12 percent reported depression or anxiety. For entrepreneurs and board members it was 11 percent, and for middle management it was 18 percent.
The “Workplace Insights Study 2025” – one of the largest German surveys on mental health in the workplace with 79,416 respondents from 357 companies – shows the risk of burnout by age. According to this, the highest risk of 18 percent is among people between the ages of 31 and 40. Statistically, this is exactly the phase in which many employees take on management responsibility.
A Forsa survey in December 2025 and January 2026 lists the most common reasons for termination: salary that is too low (41 percent), lack of opportunities for advancement (38 percent), high levels of stress (36 percent) and dissatisfaction with the direct manager (34 percent). Middle managers are on two sides of this list. On the one hand, they experience the stress themselves, and on the other hand, in many cases they are the superiors of those who quit due to stress.
Limits on bonus payments: Top tax rate in Germany reduces net effect by 50 percent
The obvious response to retention risks in this group is a higher bonus. However, this has an effectiveness problem.
Salary increases of seven to eight percent are only seen as appreciation by employees. Smaller increases are recorded as a mandatory program.
Daniel Kahneman and Angus Deaton, both Nobel Prize winners, hit a familiar threshold in 2010. Above an annual income of around $75,000, the connection between income and well-being levels off significantly. Matthew Killingsworth contradicted this in 2021. Two years later, Kahneman and Killingsworth sat down with the psychologist Barbara Mellers in an “adversarial collaboration” (PNAS 2023) and together came to the conclusion: More money continues to have a positive effect on well-being, but the effect per additional euro earned decreases with the level. Atul Mitra, management professor at the University of Northern Iowa, has shown in several studies that salary increases of seven to eight percent are only perceived as appreciation by employees. Smaller increases, on the other hand, are more likely to be seen as mandatory.
In Germany, the wage tax tariff reinforces this effect. An executive with a gross annual salary of 120,000 euros is in the top tax rate. Of a bonus increase of 10,000 euros gross, you will have around half left after deducting taxes and social security contributions. Including additional wage costs, the employer pays around 12,000 euros – a high outlay for 5,000 euros in benefits is not an efficient commitment.
Tax-free benefits Germany: 3,000 euros + annual benefit through Section 3 No. 34 EStG and benefits in kind
If the marginal benefit of additional salary components decreases, the weight shifts. The “Mercer Benefits and Wellbeing Study Germany 2024/25” provides a remarkable figure: around a third of those surveyed (32 percent) would change employers for a better benefits package without wanting to compensate for salary losses. For employees under 35, the figure is almost two thirds (more than 60 percent). At the same time, the same study finds that 79 percent of the benefit offers in German companies have grown historically and do not have a clear target group logic. So companies spend money on programs that no one specifically has in mind.
The “State of Hybrid Work 2025” study by Owl Labs shows a finding that is particularly informative for middle management. 45 percent of managers practice “coffee badging”: a short office presence for the optics, then back to the home office. For employees without management responsibility, the figure is 23 percent. Those who undermine the attendance requirement the most are the management level. 39 percent of all respondents reject job offers without flexible working hours, 29 percent see office pressure as an exclusion criterion.
The “Attracting Talent 2024” study by Stepstone with 8,400 respondents shows: 47 percent of those willing to change take corporate benefits into account when deciding on a job. In the “Roland Berger Employee Benefits Study 2025”, 89 percent of HR managers stated that they invest in benefits primarily because of employee loyalty.
Rethink compensation architecture: Total Rewards Statements and life-stage-oriented benefits
In the salary range of middle management – typically between 80,000 and 180,000 euros basic salary – tax-free benefit modules have a different effect than in the workforce. There they add up to moderate compensation. Here they compensate for what the progressive wage tax eats up in a bonus.
The monthly 50 euro benefit in kind remains tax-free. Meal subsidies up to the official benefit value in kind (2026: 7.67 euros per working day) result in an annual benefit of around 1,380 euros net for 15 days per month. Health promotion according to Section 3 No. 34 EStG is tax-free up to 600 euros annually, as is the Deutschlandticket as a job ticket. The flat rate taxation according to Section 37b EStG at 30 percent allows an additional 10,000 euros per recipient per year in benefits in kind. Combined, these building blocks result in net annual values of well over 3,000 euros. In the top tax rate range, gross bonuses would cost more than twice as much to achieve the same effect.
Flexibility belongs in the compensation architecture, not in the appendix. The Owl Labs and Mercer data suggest that self-determination over work location and working hours at this level achieves more than additional gross salary.
Middle management is the largest management group in German companies and bears the highest psychological burden. Nevertheless, it is addressed least specifically in compensation architectures.
The net perspective belongs in compensation communication. If the noticeable difference between a 10,000 euro gross bonus and a well-structured benefit architecture is marginal for the recipient, while the costs for the employer vary greatly, this is relevant information for both sides. Total rewards statements are suitable for this, but have so far rarely been established in German companies.
Health protection belongs from the image area to the core. The exposure data from the three previously cited studies describe a group with above-average psychological risks. If you want commitment and leave out this layer, you are building on sand.
Freedom of choice based on life stages works better than one-size-fits-all packages. A 35-year-old department head with a small child has different priorities than a 45-year-old department head with parents in need of care or a 55-year-old senior manager who already has his pension in mind. If the system can reflect this heterogeneity, within tax-optimized limits, it becomes a usable instrument.
Compensation & benefits strategy for middle management in German companies
Middle management is numerically the largest management group in German companies, bears the highest psychological stress and is addressed least specifically in compensation architectures. Classic bonus increases lose their effect in this salary range because progressive tax rates and declining marginal benefits distort the relationship between effort and perception. Flexibility, mental security and freedom of choice within tax-optimized benefit structures are more effective. Anyone who only discusses executive compensation in the boardroom overlooks the level that keeps the operational business running.
