December 24th, 2021 | Updated on December 27th, 2021
It’s not as simple as it once was to attract, retain, and motivate top executive leadership. Employees are looking beyond pay, although salary remains crucial, and organizations want a more agile rewards platform.
The good news is that the current disruption presents an opportunity to reimage your executive rewards strategy in a way that aligns with your objectives, business performance, and talent strategy.
What Is Executive Compensation?
Executive compensation is remuneration expressly crafted for an organization’s senior management and exec-level employees. Typically, there are three parts to executive compensation, including:
- Annual salary
- Short-term incentive compensation such as cash bonuses
- Long-term incentive compensation, like equity, which is linked to the company’s longer-term aims
The first two components are frequently utilized to attract execs. Long-term compensation, meanwhile, is used to hang onto executives and motivate them.
Are Executive Reward Drivers Expanding?
Indeed, in addition to tying exec rewards to traditional bottom-line results, organizations are increasingly linking such rewards to efforts to, say, improve diversity, equity, and inclusion, and viewing things more from a stakeholder point of view.
Not only that, but there’s a push to link financial rewards to efforts to support what’s called environmental, social, and corporate governance – ESG.
If you fold finance and ESG into your exec pay strategy, that helps you gain agility and the ability to lure, keep, and motivate people who can turn out high-quality work during tumultuous times such as these.
Aren’t Employees’ Attitudes Shifting?
That’s also true. For instance, according to a new Mercer study, employees who are deemed as thriving are a whole four times more likely to work for an organization they view as fair when it comes to pay and promotion decisions.
So, when establishing executive compensation, employers would do well to keep in mind that employees are now pickier about where they want to work.
And while it remains vital to offer a candidate for an executive position a competitive deal, compensation itself is not the end all, be all. How can you separate yourself? Through your organization’s culture, as we’ve discussed.
What About Selecting The Right Talent?
It’s a two-way street in that while employees’ attitudes are shifting, so are those of organizations. Therefore, when sizing up talent, you want to find someone who shares your enterprise’s values, will likely fit in culturally, and agrees with your organizational vision.
How Important Are Interviews For Employees?
Very, but perhaps not for the reasons you think. Sure, employees are vying for a top position, but they’re also checking you out and figuring out what it might be like to go to bat for you, in terms of becoming one of your leaders.
So, beyond compensation, the candidate experience must be good because it gives him or her a first impression of what their organizational experience will be.
How Important Is The Onboarding Experience?
Beyond compensation, this goes to executive retention. You want your new hire’s post-hire experience to be favorable in that they get the support necessary to thrive.
You want to be certain that all parties are on the same page, and that you underscore all your key selling points.
It takes a lot these days to attract, retain, and motivate executive talent, but not if you enlist the help of a consulting firm such as Mercer, which can align pay with your strategic needs while helping you remain compliant with shareholder, legislative, and regulatory guidelines.
What’s more, the firm can provide you with the flexibility to tailor rewards in ways that serve your purpose.