There’s no overstating the importance of offering a competitive compensation package when recruiting for executive roles. With every search, your executive compensation strategy should be reviewed and updated to meet the most recent shifts in executive compensation trends.
If that’s the position you find yourself in today, read on. Below, we discuss how—and why—trends shift, and the most important facts regarding executive compensation that stay true over time.
First and foremost, understand that compensation trends change quarterly. A good starting point for businesses when crafting a compensation philosophy, then, is to track shifts in compensation using tools such as Payscale and Glassdoor. In doing so, you'll be able to see first-hand what the typical base salary is for an executive position in your industry, as well as other labor market trends that can inform the compensation package you ultimately offer.
Consider, too, how remote work/flexible work schedules may affect compensation structures in today's job market. For example, studies within recent years have found that remote workers are making an average of $8,600 more per year than their in-office counterparts. If your company is hiring remotely, this is something you may need to take into consideration as you build a competitive compensation plan.
Ultimately, hiring managers and HR teams need to adapt their compensation spending expectations accordingly if they want to attract the right talent at any given time. Offering what was considered a "fair market rate" six months ago, for example, may not attract top talent in today's market.
Being transparent about executive compensation packages can help garner interest from executives who are likely well-employed in another role. Being unafraid to share details openly and speak confidently about your pay structure builds trust, allowing candidates to open up more during delicate executive salary negotiations. Your efforts in pay transparency will also contribute to employee compensation and pay equity efforts across the board—another element that more and more executives are adamant about ensuring.
More important than simply making people feel good about their pay, though, is that depending on the structure of your business, pay transparency laws may actually require sharing such details. According to the Securities and Exchange Commission (SEC), for example, all publicly traded companies are required to disclose how much they are paying their executives, as well as who is involved in determining executive pay. It’s worth noting that some American states have local laws and regulations regarding executive pay transparency—so even if your company isn't publicly traded, you may still be required to make this information available to the general public to avoid penalties and fines.
When it comes to implementing pay transparency into your compensation-building process, you may want to begin by conducting a pay equity analysis on current employee salaries to identify discrepancies or pay gaps. From there, you can use objective data to build a more subjective pay structure that extends not just to executive hires, but all employees within your organization. While this may result in a few salary increases in the short run, the benefits seen long-term—things like increased employee satisfaction and retention rates—will be worth it.
Compensation packages aren't just about the money. While it's true that base salary is important to the "average" executive candidate, there are many other elements that come into play, including:
Likewise, with the increasing cost of living, many executive candidates may now expect a compensation package to include guaranteed and scheduled pay raises to match the cost of living.
More than ever, executives want roles where they can strike an ideal work/life balance. Rather than being expected to sacrifice their personal lives and well-being for the growth of the company, executives and their teams are demanding more flexible scheduling, remote work opportunities, and similar perks.
Offering compensation packages that include work/life balance perks will not only make the opportunity more appealing to prospective candidates, but also pave the way for happier and more productive leaders.
As your hiring managers and human resources team builds a total compensation plan for executives, then, be sure to consider which components you’ll include to keep your offerings competitive.
With so many changing and emerging trends in executive compensation to keep track of, knowing whether your proposed salary range is competitive enough for today's job market isn't always easy. This is where it can be helpful to reach out to a team of professionals who know the industry inside and out.
For nearly 30 years, TDS Global Services' executive recruitment team has been a leader in executive recruitment. During that time, our experts have made contact with hundreds of thousands of executives across all industries, noting their salary requirements and what they’d need in order to consider a new role.
It’s this daily work that ensures our experts stay up-to-speed on the latest shifts in salary ranges, incentives, pay increases, and other compensation management trends across your industry. Being in regular contact with candidates gives our team a special insight and ability to confidently advise on appropriate salary ranges for any role imaginable.
Our expert recruitment team is always happy to hop on a call to discuss compensation trends for your industry and provide some expert guidance for your team to work from—no obligation. Just give us a call!