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EXECUTIVE COMPENSATION: Rewarding Accountable Leadership Never before have our executive leadership teams been so closely scrutinized. Their behavior, performance, and compensation are monitored and analyzed not only by company stakeholders, but also by media and policymakers.
By Dr. Gijs van Bussel and Jasmine De Clerck
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n the wake of the financial crisis, we’ve reached an inflection point: Companies are expected to prioritize the management of People, Planet, and Profit. But are actions supporting this expectation? Are corporate leaders being held accountable for successfully achieving the balance? To answer these questions, a research team at Borderless—the Brussels-based leadership consultancy and executive search firm—surveyed international senior executives in roles at the top three levels of their organizations. Borderless researchers, led by Consultant Jasmine De Clerck, worked in collaboration with Dr. Gijs van Bussel, Professor at Nyenrode Business University and partner at PwC’s Human Resource Services practice in the Netherlands. “If it’s true that compensation drives behavior, then we wanted to know to what extent organizations are transforming financial packages and benefits to support today’s expectations of corporate leaders,” said Ms. De Clerck. “Our research showed that despite years of talk about corporate social responsibility based on the ‘planet, people, and profit’ ideal, there is still a clear mismatch in aligning management compensation structures.” Three key conclusions were drawn:
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PROFILES IN DIVERSITY JOURNAL
1. Short-termism Trumps Corporate Social Responsibility The prevailing view in terms of awarding variable compensation seems to be short-termism. “When asked about their variable compensation— cash bonus, stock options, shares, etc.—participants responded that it is most often linked to their short-term impact on the business—that is, financial results and
November/December 2013