Monthly Archives: August 2014

True value in effectively remunerating executives

Would you work for less than market value in a senior role on a long term basis? For most executives, the answer is a definite ‘no’. Trends in executive remuneration should always remain on your radar, particularly when considering a new position or changing organisations.

A significant increase in focus on executive remuneration has occurred in recent years. Courtesy of the Global Financial Crisis, greater attention to executive salaries can be attributed to a call from shareholders for increased transparency and commensurate reward for performance. Gone are the days of unchecked disproportionate remuneration packages, bonus and incentives, with CEOs from major companies foregoing significant bonus payments in recent times.

Recently, Slade Partners had the pleasure of hosting a boardroom lunch with guest presenter, Executive Remuneration and Benefits expert Nicholas Jackson. He discussed the importance of remuneration in the context of:

  • the ‘two strikes’ policy and its potential to spill the Board for ASX listed companies
  • its impact in ensuring the attraction and retention of appropriate talent
  • how it shapes behaviour through STIs (short term incentives)
  • how it drives long term focus through LTIs (long term incentives)
  • its role as an expression of values within an organisation

Nicholas also discussed the emerging trend of STI deferral – or medium term incentives – characterised by higher STIs and lower STIs, with the value of additional STIs or excess of target deferred into equity instruments, with the instruments retention tested and gradually released. The advantages of this strategy include ‘smoothing’ the reward during volatile times, facilitating retention, controlling short term decision making by subjecting rewards to long term impacts and providing a possibility for future ‘clawback’ amendments.

During the subsequent discussion forum with key HR leaders and senior managers across various organisations, it became apparent that there was no simple ‘one size fits all’ solution for Remuneration and Benefits, even for companies within the same industry. Generally the value of STIs and LTIs in engendering behavioural change and high performance was only realised where individuals believed they could actually impact outcomes to obtain the incentives, as opposed to an overall company performance bonus, to which they felt they had little power to influence, for example.

So what should the key considerations be in regards to any Executive Remuneration and Benefits scheme?

  • It should fulfil the primary requirement of acting as an attractant to engage the best candidate for the role; analysing competitor and best practice companies can provide guidance in this area
  • It should facilitate the retention of the best and brightest leaders; individuals should feel motivated and engaged, whilst also believing that incentives could be realised with extra effort
  • It should not reward individuals for ‘just doing their job’ but encourage better performance, behaviours and outcomes
  • Whilst rewarding positive performance would be the primary focus, close scrutiny of the scheme is advisable to ensure no inadvertent negative behaviours are rewarded
  • Regular reviews should be conducted to ensure continued relevance and that organisational goals are being achieved as a result of the remuneration and benefits strategy in place

What are your key considerations when formulating Executive Remuneration and Benefits?

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Do we have to use ‘part-time’ in the pejorative?

Amanda Milledge wants to hear your story.

Amanda Milledge, lawyer, NED and writer argues that part-time per se has to be viewed not as a second tier, second grade working title, but the new normal.

Recently I’ve spent time listening to her describe the book she’s authoring about the men and women who have found new ways of working without compromising success.  Engaged powerful part-timers is how she envisages work cultures developing.

She is also occupied with a project identifying tertiary qualified people who have carved out successful careers working in ways that depart from the traditional ideal worker.  That may include flexible, part-time, telecommuting or some other way that enables them to live a balanced life, in particular to do an equitable share of the domestic load.

Amanda Milledge’s argument is that a balanced life leads to more productivity and better decision making.

Right now, this argument has divided thinking, and the battle lines are drawn.

So why the fight and what is the coveted territory over which the battle is fought?

On one side of the territorial dispute stands Anne-Marie Slaughter who argues that it’s our inherent workplace structures and cultures that exclude very capable women who have sought to balance family life with working life. On the other side of the battle-line, the likes of Sheryl Sandberg  (COO of Facebook and Author of Lean In)  sees the lack of women in senior roles as a consequence of their reluctance to show ambition and put themselves forward for promotion.  She’s asking women to ‘man up’ rather than waiting for the tap on the shoulder, or compromising their careers by spending more time with their families.

Mary Matalin, who spent two years as an assistant to Bush and the counsellor to Vice President Dick Cheney before stepping down to spend more time with her daughters, wrote: “Having control over your schedule is the only way that women who want to have a career and a family can make it work.”

Yet the decision to step down from a position of power — to value family over professional advancement, even for a time — is directly at odds with the prevailing social pressures on career professionals in most western countries.

If you’d like to contribute, Amanda’s email address is amanda.milledge@internode.on.net.  She’d enjoy hearing from you if you have a point of view, or particular experience on either side of the battle lines. She’s looking for male, female and organisational /cultural perspectives.

We’re also looking forward to hearing your point of view.

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Help, get me out of here!

I had barely sat down at my desk, when the phone rang. “Warwick… help, get me out of here!” I thought I recognised the voice, but waited for his confirmation, “It’s Brendon here. You remember, we spoke six weeks ago when you approached me about a Supply Chain Director role.” I did remember and allowed Brendon to continue. “We met for interview and then you shortlisted me for your client.” Brendon had subsequently withdrawn his application. “I pulled out because my boss painted such a rosy new picture for my future here and convinced me to stay…”

“Now 6 weeks later I’m reaching out to you for help. You were right, all the promises are evaporating and I’m just miserable – I really should have taken your advice. Do you have anything else like the role we spoke about?”

My counter-offer advice to Brendon at the time is well-known amongst our industry and inevitably proves itself right, time and time again… but candidates occasionally elect not to follow it.

Counter-offers most often end badly. Many people who look to move on from an organisation do so for all the right reasons, and sometimes unfortunately stay for all the wrong reasons, with most resigning again within less than 12 months. In some cases, resignations do set the scene for a good honest productive discussion between employees and employers, particularly if there are straightforward issues that can easily be addressed to ensure better working conditions.

When I took Brendon’s call, I was in the middle of processing conversations I’d just had at another valued client meeting. Present were the CEO, the CFO who I placed four years ago (still doing a great job), the new Head of HR and one of his HR Business Partners. With an increasing need to retain high performers, as well as attract better quality hires in a very competitive sector, the company had recently held onto two staff members with counter-offers. They promised improved role functions with commensurate salary increases to avert two vacancies. Early in, the two team members were re-engaged, but only because there was real structural change and intent to provide a better career track.

What should Brendon have done? Without going into detail, Forbes reports career experts generally say you should never accept a counter-offer. You should probably never make one either, but that’s a story for another time. In Brendon’s case the job market has now moved on. I of course I will help him the best I can… and most likely my client, as their counter-offers lose their shine just as quickly.

What is your experience with counter-offers?

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Bacon, eggs and tomato please

To ease myself back into my first day back on the treadmill after a few weeks quaffing the European summer, I took 30 minutes before work this morning to have breakfast at my favourite local hole in the wall.

A lot of us detest breakfast meetings, but breakfast itself? Love it!

A non-descript shop front window on Little Collins Street (just near our William Street offices in Melbourne) hides the best breakfast joint in town. It’s called Cafe Intimo and Frank and Jason, the two guys who run it, make you feel right at home. They’ll call out ‘hey’ from behind the counter as you step in the door, pass on a few footy tit-bits, and tempt you with a seasonal special. They’ll name drop just enough to ensure you know you’re in good company, but they leave politics for the cab drivers and global tragedies for the water cooler.

There’s a calming rhythm to their world @work. Two partners who know their customers, who detect a disposition at three metres and remember likes and dislikes. They understand the rushed and the reflective, crank up the espresso machine at dawn and are home by nightfall.

And if you know me, you’ll know I have a deep failing when it comes to food. I love bacon, eggs and tomatoes. Piled high and flavoursome. Not as thick with oil and butter as Jimmy Watson’s, but don’t give me dry toast. Intimo’s breakfast is perfect, but it’s never been featured on any TV show, Jason’s no celebrity chef and Hecker Guthrie haven’t done the interior.

It’s true to its owners and its band of wide-eyed and weary customers. It dishes up very agreeable food for breakfast, lunch and anytime in-between. Innovation means seasonal variations and when last year they knocked through the wall and increased the seating, it lost none of its personal service.

Now that’s a business model we could all copy. I thought I’d check on TripAdvisor to see if anyone else loves this place – they do. And the only one who didn’t like it just made me love it even more: “Never go to this place – Worst place in Melbourne CBD.”

New Yorkers have their diners, I have Cafe Intimo.

Where’s your favourite work-a-day breakfast spot?

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Quizzed about digital

Earlier this year we addressed the increasing concern that a “digital talent gap” existed between the digital expertise needed by companies and the digital talent available.

Findings in a US survey of 750 Fortune 500 and ad agency execs, The State of Digital Marketing Talent conducted by The Online Marketing Institute, revealed a wide discrepancy between the digital marketing expertise required by organisations and the talent actually available to them, at every level. When quizzed about their digital teams, company executives revealed that only 8% were strong across all digital areas.

These startling revelations got us thinking: the need for digital talent in Australia is widespread, but are Australian companies also finding it difficult to identify and develop talent because of subjectivity in hiring?

What if we could understand more about the way Australian companies deal with the development, training and hiring of digital talent? In the US, companies across the board were unhappy with their own level of training and assessment. Amongst brands and agencies alike, there appeared to be insufficient focus on grooming talent, training and formally assessing skills with 75% relying on referrals from their peers to meet their hiring needs. Just 10% of respondents used some form of testing to measure employee’s skills or knowledge.

With these considerations in mind, Slade Partners teamed up with NET:101 and Sweeney Research to conduct the Australian Digital Skills and Salary Survey about digital employees in Australian organisations. The survey, which launched last week, focuses on the current skill-levels of digital talent; the acquisition, development and retention of digital employees and the salary levels in line with responsibilities of digital talent in Australian organisations.

The results will allow us to see if Australians share similar sentiment to the US regarding the overall skill levels of those in their digital teams, and if Australian organisations have been impacted by a digital skills gap. Certainly as the digital recruitment lead at Slade Partners I have noticed an increased demand for digital talent in the area of analytics, content marketing, digital copywriting and communications, and digital design and development – yet very few in the industry currently use their own digital assessments as part of the recruitment process.

We’d really like you to have your say:  Click on the image below to take part in the survey.

sweeney-survey

Participate or share the Australian Digital Skills and Salary Survey with those colleagues who would be interested in receiving the results. The survey will take about 10 minutes to complete and is completely confidential and anonymous. Results will be sent to all respondents who complete the survey and a Digital Talent Pack may be awarded to one respondent at the completion of the survey process.

So what’s your view on digital talent in Australian organisations?

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