It may be the hottest October we’ve experienced since records began though looking at the financial markets, there’s heat too with red graphs and falling numbers as the financial markets tumble again. This comes alongside company shares which are taking a hammering along with the Euro.
It seems opportune timing for the ABI's (Association of British Insurers) Report on Board Effectiveness and the ABI’s re-launch of the Principles of Remuneration last week.
Both reports make a surprisingly welcome distraction. Okay, that may be a little enthusiastic. While the board effectiveness report focuses on succession planning, diversity and board evaluation, it predictably highlights the need for greater transparency and progress. All good stuff so long as the rhetoric is not consigned to filing cabinet of the Head Office ‘nice to have’ goals.
However the ABI’s remuneration principles interest me more. As reward professionals, we’re constantly reminded of the attention given to ‘chasing of the perceived median’. When carried out blindly, we understand at first hand the role it has inevitably played in executive packages that don’t match up to their performance outcomes.
The report also addresses the issue of remuneration quantum and the remuneration committee’s role to ensure that the package is appropriate in the context of the overall company. Yes, size finally matters as does the organisational context.
After decades of speaking out on executive reward it’s fair to say that the ABI has a tough job to persuade its members to stand firm on executive pay decisions. Still, the coming months will offer an insight as remuneration committees recommend and shareholders vote on upcoming executive remuneration packages. I will certainly be watching these decisions closely – will you?
As a Marketing practitioner, hence an HR/Reward "outsider" my response to this is what does it mean in practice and what are the likely outputs?
Am I also sensing entrenched views in the reward world and a need for more creativity and innovation - both from a strategic and implementation viewpoint. Surely the current climate demands brave, new, and agile thinking?
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