TM - March 2008 - (Page 34)

recruitment & retention assessment & evaluation compensation & benefits performance management learning & development succession planning [compensation & benefits]by Irv Becker and David Wise HR Crucial to Executive Compensation Process The world of executive compensation has changed during the past few years. Never before has there been more attention paid to the finer details of compensation programs, and the roles of key players in the executive compensation process have changed dramatically. I n most companies, it is now the job of the board compensation committee to govern executive compensation — and for good reason. Board members have a fiduciary responsibility to manage not only the costs of the executive pay program, but also to ensure its link to long-term value creation for all of the company’s constituencies. However, as the board has taken over the process, some companies have overreacted to the shift in the governance landscape by leaving many HR practitioners — who used to be the strategists and administrators behind the plan — out in the cold. The irony of this outcome is, given the current demands on executive pay programs, it’s more important than ever for HR to play a central and critical role in the process. The best way for HR to do that is to gain perspective on what makes a good executive compensation program and provide proactive support for the committee. Three Things Every HR Practitioner Needs to Understand A good executive compensation program balances three key forces. 1. The company’s strategic needs. An executive compensation program needs to support the organization’s near-term and long-term strategy. Incorporating strategy involves a detailed understanding of how the business makes money and how executives create value. This isn’t an intellectual exercise. This information should provide a baseline for how the pay program should be structured. HR practitioners need to be able to answer critical questions, including: • What’s our strategic plan? • What’s important for our business to do well this year? During the next three years? • Who are our customers, and what do they want? • How do we compete, and how are we differentiated in the market? • How do we make money? 34 March 2008 talent management magazine www.TalentMgt.com http://www.TalentMgt.com

Table of Contents Feed for the Digital Edition of TM - March 2008

TM - March 2008 Editor's Letter Contents Human Performance - The Paradoxically Gifted Leading Edge - Reverse Engineering: Shifting Focus to HR's Cause Learning Connection - Sharing Talent On the Hunt for Talent Unlock Employee Motivation Through Personality Testing HR Crucial to Executive Compensation Process Downtown Management: Surfing May Not Be Slacking Think Tanks Aid Government in Talent Management Creating Consistency: Enterprise-Wide Succession Plans Battle Retention Deficits With On-Boarding Sunbelt Rentals: A Mid-Level View of HR From the Trenches Butterball: No Chicken When It Comes to Talent Management Advertisers' Index Editorial Resources Full Potential - Choosing Change

TM - March 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.