Executive pay and the B-word

Executive Pay. It’s that time of year again.

We’re tired. You can see it in productivity and attitudes. This year’s been busy; coming out of the old normal and entering a sense of the new normal.

But it isn’t over yet. In fact some of the toughest times lie ahead in the next couple of weeks, because for those companies that run their financial years from January to December. We are entering budget season for next year. Wage negotiations and a demand for full bonuses are approaching (if you pay them in December as some companies do).

The problem is that most of us have short memories. We are not very good at arguing either. We forget that- for two years, many companies hovered on the breadline between collapsing and continuing. There is still a debt on the balance sheet that has to be repaid for many of them, literally as well as figuratively.

How attitudes need to change in the current economy

We can’t use the current state of the failing economy as an excuse to put our demands for increases and 100% bonuses. If we do that, then we can’t have the same excuse when the economy does recover. We should be prepared to accept zero increases in that case.

That won’t happen, because as South Africans we are not constructed to even contemplate that. However, we need to start moving forward. It’s not the new normal, it’s actually the old normal: if there is no company, there is no salary. That should not be an excuse for exploiting workers, but it should be the foundations for any negotiation on Executive Pay.

C-suite executives and senior managers need to be confident speaking to their staff about the performance of the company. Talk about what it needs and how all staff will receive rewards if milestones are achieved in the financial year. We often end up with protracted deadlocked negotiations between unions and management. The spill-over damage of destruction to property and physical violence is a testimony to the leadership of that company. The same way as to the prevailing level of discomfort in this country.

Attitudes towards executive pay

Sometimes the fault lies at the very top of the corporate chain. I have come across aspirant C-suite candidates basing their Executive Pay requirements on their personal needs. Not assessing what the company can afford or what the sector is paying. Candidates vying for the top job, need to have their own self-worth based on the science and skill that they were going to bring to their jobs.

When candidates sit in front of hiring committees, they have a very rare window of opportunity to pitch for the package they want. However, they have to be able to back it up with insight and reason. Accepting a package and attempting to renegotiate once you’re behind the desk, isn’t a good look. Especially because you found out that your peers are earning more. You should have known that before you started.

Use the opportunity in the interview to find out how performance bonuses are paid. Sometimes, executives score because they are part of a pool and the company does well. Other times, they lose out on the total bonus, because the company has not performed as the shareholders expected, even if a particular manager’s division shot the lights out.

This is conveniently forgotten by the aggrieved high flier, who then moans about being under-appreciated or even prejudiced against. It could have been avoided during that critical first interview when the rules of engagement were hammered out and agreed.

Now, companies tear up the rule book when it comes to the appointment of scarce skills and occupiers of the C-Suite. They are creating individualised packages for the individuals that get the nod. It’s the same principle: discuss, ask questions and be sure before putting signature to paper. One person’s wings to fly, might be another’s cage – and not necessarily a gold one.


Fair Pay For The Job

Finally, remuneration must be based on the job. Not based on a candidate’s debt. Nor should it be based on candidate’s desperation to get behind the desk and start earning a salary. Each person must be paid what the job is worth. If that’s the case it doesn’t matter what people are paid because it is essentially fair. People doing the same jobs – and meeting performance targets – receive similar remuneration.

When we all think about it like that, we might just be on the road to ending the often terrible loggerheads that companies get themselves into. Ending the collateral damage that comes with it – in the run-up to the festive season of all things, over cost-of-living increases and bonuses.

If we do that, we might be able to reduce our stress levels. Getting on with what we should be doing in the first place; our jobs. Ultimately making money for the company and its shareholders. Which benefits the community as a whole!

lucia mabasa
lucia mabasa - managing director of pinpoint one human resources