Talent Management - July 2008 - (Page 28)

recruitment & retention assessment & evaluation compensation & beneﬁts performance management learning & development succession planning to have stock as part of their compensation and retirement plans, encouraged by the CEO to not sell and to keep it for as long as they could. And people lost their retirements and everything else. There needs to be somebody that looks at the interests of shareholders, where stock is a vehicle of compensation in the companies in which they choose to invest.” Expert Assistance Stock isn’t the only consideration on talent managers’ executive-pay agenda. They must work closely with compensation experts to create transparent, competi- but the investment community is expecting 15 percent in growth and revenue, that’s a disconnect,” Nussbaum said. “There’s a real struggle sometimes if I’m a senior talent manager with who’s my boss. Your boss is the shareholders, the board, the compensation committee.” Casey said talent managers also have to know competitive executive salaries in their markets and ﬁgure out the best mix of compensation vehicles to appeal to different employee groups. This involves metrics. “Talent managers, as a general rule, don’t like measuring anything,” he said. “Most HR or talent management departments measure turnover, but they don’t measure turnover for a critical group. And they don’t measure impact of that turnover in dollar and cents terms. “There are ﬁve things they should be measuring: employee engagement, turnover for people in critical positions — not just senior ofﬁcers — time to productivity and time to ﬁll a position. The other one is the performance of people they bring in for the ﬁrst year, separate and distinct from overall performance. “If employment engagement is high, fair. If turnover is low, fair. If time to ﬁll is good, you’re paying well but maybe not outrageous. If time to productivity is low and performance is good, you know you’re hiring good people.” Paying the Right Price Compensation committees are looking for senior talent managers to ensure compensation programs balance within the new understanding of what is reasonable, transparent and performance-oriented. tive and comprehensive compensation packages that reward and motivate executives without raising red ﬂags. “Everything has to be disclosed: amounts, events (what happens when executives retire or voluntarily resign) and performance measures (what does it take to earn the bonus or the stock award, proﬁtability, growth targets),” said Kevin Nussbaum, president of consulting ﬁrm CBIZ Human Capital Services. “Nobody will ever get into any issues with fair-market-value compensation for fair-market-value performance. “If your performance measures are aligned at the median and your pay structure is aligned at the median, you’re ﬁne. It’s when you start paying people at the 90th percentile for 50th-percentile performance that problems appear.” Compensation committees are looking for senior talent managers to ensure compensation programs balance within the new understanding of what is reasonable, transparent and performance-oriented, Speidel said. This requires understanding the business, shareholder expectations, predictions for growth, revenue and profitability, and prospects for stock price. “If I’m looking at growth in revenue or proﬁtability year over year in my bonus plans of only 5 percent or 8 percent, Nussbaum said it may be hard for many talent managers to get the right compensation answers unless they’re experienced in compensation modeling and design. Using the fair-marketvalue standard helps. “Fair-market value by its deﬁnition is ‘willing buyer, willing seller,’” he explained. “You have that negotiation when you’re ﬁrst trying to attract somebody to your organization, and generally that initial employment deal is the best source of fair-market value out there. That person wants to get the best deal for them, and the company wants to limit its exposure as much as possible and still get the right person.” Over time, many things can impact fair-market value: historical performance, industry movement and the organization itself. Nussbaum said talent managers must be prepared to answer questions such as, “Are bonuses still being paid? What performance measures is bonus pay based on? What are performance targets in the industry? What are comparable companies paying, and what are comparable companies requiring as performance standards to achieve those payouts?” “This season, as those proxies start coming out, the information is even more voluminous than it was last year. And the SEC has said it wants to see more,” Nussabum said. “Short term, it will lead to higher levels of scrutiny and governance on compensation, but long term, it 28 July 2008 talent management magazine www.talentmgt.com http://www.talentmgt.com

Table of Contents Feed for the Digital Edition of Talent Management - July 2008

Talent Management - July 2008 Editor’s Letter Human Performance Leading Edge Learning Connections Guest Editorial Passive Candidate Recruiting: Evolving with a Changing Workforce How Do They Feel? Sec Regulations and Executive Compensation Performance Management: A Retail Perspective Train the Non-Trainer Management-Go-Round: Developing Future Leaders Netflix Creates Its Own Script for Talent Management Intuit Spotlights Strategic Importance of Global Employee Recognition Make HR a Profit Center: Automate Technology to Gather Tax Credit Data Offshoring and the Impact on Talent Management Advertisers’ Index Editorial Resources Full Potential

Talent Management - July 2008

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