In this article we cover the use of executive remuneration surveys for competitive compensation strategies, emphasising benefits such as gaining a competitive edge and attracting top talent. Allow us to dispel misconceptions and recommend regular participation to stay current with market trends.
by Kylee Davidson
8 January 2024
Master Executive Pay with the Help of Remuneration Surveys
Designing a market-related, competitive senior management remuneration strategy requires a combination of know-how and access to the best tools. A reputable and comprehensive source of executive pay quantum and metrics for the Australian market will support this strategy by assisting you to attract (and retain) the right talent for your executive and general management population.
A reputable executive remuneration survey delivers powerful insights into the pay scales of various roles by key pay differentiators such as organisation size, industry and location. Such surveys enable businesses to analyse critical market data on compensation, benefits and incentive plan (both STI and LTI) design.
By leveraging these insights, businesses of all sizes can ensure that their executive remuneration practices are not just in line with current market demands, but also tailored to their specific organisational needs and goals, maximising the value proposition for both employees and the company.
To help you better prepare for integrating these insights into your key management personnel (KMP) and general manager remuneration practices, our specialists at GRG have compiled a brief guide on how to capitalise on the data found within an executive remuneration survey.
Remuneration Survey Basics
Any remuneration survey begins with the survey provider systematically collecting current compensation data for specified job roles across particular industries, employee groups or locations (for example). This process requires clear and concise data collection methodologies to ensure the validity of any analysis.
The larger the data set collected, the more robust and market-related the remuneration survey results. Survey outputs should include a range of statistics that provide in-depth insights into current market conditions by each remuneration component. A reputable product will become an indispensable company resource, assisting the remuneration professional find the critical alignment between employee remuneration quantums and incentive plan design with company performance.
Unlike other employee populations, the executive and general management group are typically more closely aligned to company performance with multiple remuneration levers designed for mutual benefit including:
- Short-term incentives
- Long-term incentives
- Service Vesting Equity grants (an emerging practice), and
- Fixed pay and benefits
Having a complete source of information that outlines both the pay quantum and metrics for every role enables you to make informed, market-driven decisions that suit your company circumstances and business strategies.
Benefits of Participating in a Remuneration Survey
Participating in an executive remuneration survey offers a variety of advantages that drive success in the contemporary business environment. These benefits include:
1) Competitive Advantage
Having accurate, timely market data for your executive and general manager population specific to your company’s circumstances allows for benchmarking against your peers. Such data-driven insights place companies in a better position to respond to market dynamics, ensuring that their compensation packages are both competitive and aligned to your company’s business strategies.
2) Talent Retention and Acquisition
In a business environment where the battle for top-tier talent is fierce, offering competitive remuneration packages is a practical measure to attract new employees and keep them motivated, engaged and aligned to desired business outcomes. Participation in a remuneration survey ensures access to information that helps facilitate the designing of packages that balance individual performance, market relativities and your company’s business strategy.
3) Strategic Decision-Making
Executive remuneration surveys provide foundational data and insights that can guide compensation budgets and incentive plan designs that are aligned to overarching company strategies. Employing a data-driven approach, supports more informed, strategic decisions concerning executive pay and incentives.
4) Investment Protection
Continual benchmarking through remuneration surveys ensures the remuneration professional is aware of current market trends in executive and general management remuneration and can monitor the company’s investment in its talent for achieving desired company results.
Despite the widespread utility and application of executive remuneration surveys, they remain widely misunderstood, leading to misconceptions that can hinder an organisation’s approach to paying their executives and general managers.
Let’s debunk some of these myths and shed light on the holistic view of executive compensation that a remuneration survey offers.
“Only Large Corporations Can Benefit from a Remuneration Survey”
Many believe a remuneration survey caters solely to larger companies and organisations, overlooking the value they provide to small and medium-sized enterprises (SMEs).
In truth, businesses of all sizes can leverage these surveys to gauge market trends and align their compensation strategies accordingly. For example, fast-growing companies need to structure their remuneration framework to reflect their future business state and will need to benchmark their executives in terms of quantum and metrics for such growth. A remuneration survey can be a valuable tool that offers insights to remain competitive and to plan for future business outcomes, regardless of the company’s size.
“A Remuneration Survey Only Focuses on Pay Quantums”
Another common misconception is that remuneration surveys only focus on how much to pay. Besides detailed analyses of compensation components such as short-term incentives, long-term benefits, and fixed pay and benefits, some surveys will outline how to pay your executive. In other words, the incentive plan metrics which are another critical component of executive and general manager remuneration structures. You can also tailor the data according to market capitalisation/revenue range and sector for a more customised view of the field.
The survey is set to provide a well-rounded view of the entire compensation package, enabling businesses to create alignment between individual performance and business outcomes.
“Remuneration Surveys are too generic and lack robust, defensible information”
Notwithstanding the fact there are many survey providers in the marketplace with various ‘motives’, the remuneration professional can navigate the market and discern the most appropriate data source using their know-how. If the remuneration survey provider clearly displays its data collection methodologies, then other important features of a reputable product include providing:
- Role Matching: with a title of the role and or job description to allow remuneration for like roles to be analysed and compared.
- Role Size Grouping: to ensure you can compare jobs of a similar size such as by company size as measured by market capitalisation or revenue.
- Industry Sector Data: to enable data comparisons by industry sector to allow industry specific influences to be recognised.
How Often Should Your Company Participate?
Staying abreast of fluctuating market standards is non-negotiable if you want to remain competitive in your industry. Regular participation in remuneration surveys is a strategic action to ensure your company remains at the forefront of ever-evolving compensation trends and industry practices.
The greatest benefit from a remuneration survey is derived when an organisation participates on an ongoing basis, providing data at least annually post their remuneration review and regularly referring to results that allow for consistent tracking of market shifts enabling informed decisions on executive pay packages.
Regular participation not only provides insights into current trends but may also provide insights into market forecasts of future movements, equipping businesses with the information needed to adapt and thrive.
How Godfrey Remuneration Group Can Help
While the information is clearly laid out for you in an executive remuneration survey, it can be challenging to fully incorporate the insights into your operations without clear direction and support in navigating their possible utility.
Our specialists at GRG can offer the precision, expertise and transparency you need to put this data to use. Through our Executive Remuneration Survey (ERS) membership, remuneration committees, boards, and HR professionals will have access to an in-depth look at market practices for over 60 executive and general manager roles, fusing publicly disclosed information with company-collected data. This information covers both CEO-1 and CEO-2 levels (executive and general manager roles), with refined data on quantum and variable pay plan metrics, including short-term and long-term incentive remuneration.
Moreover, with the help of a dedicated client account representative, you can easily provide and review pertinent executive and general manager remuneration data with GRG who takes the time to understand your unique situation and offer tailored solutions to meet your needs.
Crafted with the Australian market in mind and backed by GRG’s commitment to data quality and customer satisfaction, the ERS is a trusted source for a comprehensive and nuanced understanding of remuneration practices.
For more information on our executive remuneration survey could benefit your operations, get in touch with one of our consultants today.