Executive compensation has to motivate certain behaviors, limit risks, ensure corporate competitiveness and guarantee cost flexibility. It must be built around two simple questions: How much? and How? In that context, compensation must:

  • be derived from corporate strategy, in other words linked to the company's financial indicators, success factors and performance standards
  • align management behavior with sustainable company value and corporate values
  • incentive desirable entrepreneurial risk and consequences for wrong behaviors
  • help to win, motivate and retain key performers and top talents
  • ensure cost flexibility through appropriate variable compensation based on performance and results
  • give employees and managers concerned a feeling of internal and external compensation fairness

The dynamic regulatory environment, changing corporate strategies and situations as well as changing staff preferences make answering these essential questions a highly complex task for companies.

Finding the right design and correct dimensions for the compensation system is essential. The compensation system forms the basis upon which managers and technical specialists achieve strategically relevant results and demonstrate desired behaviors. Used correctly, it is one of the most effective management tools of companies.

hkp/// group develops compensation concepts that can serve as a basis for lasting corporate success, risk-based management, and value- and values-based leadership. Our consulting portfolio covers all links in the compensation value chain, from devising, implementing and communicating solutions to providing on-site support for the HR function.

Author Petra Knab-Hägele

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