Everyone knows financial and operational performance are key measurements for successful businesses. But these aren’t the only things that should be looked at when determining how well an executive team has managed an organization. It’s time to take more into consideration when looking at compensation. Here’s how executive reward drivers have expanded.
How Are Executive Reward Drivers Expanding?
More and more, enterprises are embracing new expectations of executives, as well as the framework for evaluating and compensating their performance. Instead of exclusively thinking about operating metrics, employees are increasingly expecting their employers to consider purpose-based goals in addition to pay equity.
How are purposed-based goals different, and how do they fit into executive rewards? It’s simple: People expect their work to have apositive impact on the world. The top talent today isn’t willing to work for an employer that falls short of this. Since work is such a huge part of most people’s lives, it makes sense they’re demanding more accountability and transparency from above.
One of the most intuitive ways to ensure purpose-based goals translate into action and not just empty promises is tying fulfillment to executive reward packages. While this might sound scary at first, there are some pretty compelling reasons to take this route.
Why Should Organizations Act Now to Reimagine Rewards, and What Should They Do to Accomplish This?
There are several strong motivating factors that should inspire enterprises to rethink their executive reward drivers. Here are a few of the top benefits to taking a new approach to executive compensation:
- You’ll be able to nab and keep the best talent– As already mentioned, more and more employees are demanding their workplaces take greater steps to make purpose-driven investments. This isn’t just about doing good on an organizational level; it’s also about ensuring people are getting the rewards they deserve.Assuming this mindset is just a phase puts your business at risk of losing your best employees, while also not be able to hire the best people out there. A study from executive compensation consulting firm Mercer found: “Thriving employees—those prospering in terms of health, wealth, and career—are 4X more likely to work for a company they perceive as ensuring equity in pay/promotion decisions.”Clearly, the most attractive talent wants to work for a certain kind of organization—one that values people for their contributions in a transparent and fair way.
- Eliminate disparities in pay for women and people of color in general– No matter how you cut it, there is still a substantial difference between how people are compensated based on race and gender, even on the executive level. This pay gap isn’t just unfair; it’s going to be detrimental to attracting the best talent. Even if your organization isn’t intentionally practicing unfair compensation practices, bias is implicit in all of us. This is why utilizing data is an important part of reimaging executive compensation. By analyzing hard data, it will be easier to see how people should really be getting compensated for their work.
- Tie compensation to purpose-based initiatives– Executives that really want to walk the walk should tether their reward to purpose-based initiatives that benefit the whole corporate culture, as well as the community and world. People want to work for someone who they admire. There is just about nothing more admirable than putting your money where your mouth is. Furthermore, this can provide greater motivation for executives to meet goals beyond just operational metrics, which are certainly important, but don’t necessarily engage employees.
- Find an executive compensation consultant– The world of executive total rewards is in a state of transformation. Having an expert or team of experts there to guide you through the process can be highly beneficial. Not only will they have novel ideas that wouldn’t have been considered by internal teams, they’ll have the technology to help understand pay disparities and fix them.
Ideas around executive compensation are changing with the times. Enterprises that strike the right balance in terms of executive rewards packages will be able to attract better executive talent, while also keeping the rest of the employee base happy. Creating a positive work culture like this can be hugely facilitated through better rewards.
“Professional web ninja. Certified gamer. Avid zombie geek. Hipster-friendly baconaholic.”