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Executive Comp Under Attack: A “Blip” or “Sustainable Shift”

This morning I facilitated a meeting with 25 senior HR executives from a very eclectic group of companies and industries, private/public/not-for-profit; large/small and so on. Topic: “executive compensation.” It was a fascinating and provocative discussion!!!! This group of HR executives “rocks!” I plan to address several critical questions that emerged in upcoming posts. Today we will focus on “Executive Comp Under Attack: A Blip or Sustainable Shift?”

Irrefutably we are seeing a wave of change. We agree that we are finding ourselves in a very unique time. Most companies are implementing cost savings programs and reviewing all pay plans. Generally, HR executives see and continue to expect widespread declines in all areas of compensation – at least short-term -and many initiatives, ranging from the mundane to the creative, are being implemented.

One of the questions the group debated at some length was whether the changes we are seeing represent a “blip” or are a part of a major and sustainable “shift?”

Can we agree that Americans generally have a short attention span? We go from bubble to bubble. But, is this bubble different and long-lasting? Interestingly more than 50% of executives at the meeting do not perceive that this bubble will cause fundamental and long-lasting change in US executive compensation practices. At the very least not much will change unless the government puts meaningful controls in place. This group believes that once the economy comes back, we will revert to our old ways. Interestingly, however, a significant number of executives believe that the bubble we are in right now is fundamentally different. It is broader and deeper than the technology bubble was. It involves huge social issues in addition to financial ones. This bubble is of a magnitude we have not seen since the Depression and will have long-lasting impacts on executive compensation. What do you think?

Future blog posts will address other executive comp questions that were disucssed, such as:

  1. Are US executives outrageously overpaid?
  2. What is the psychology of recalibrating executive pay downward: What’s Right and What Are the Practical Realities?
  3. Are there viable alternatives to compensation as a way to retain and motivate top executives and key talent?

More later…


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