You Get what you Pay for when Attracting Top Executive Talent
Executive remuneration, compared to the value they create, is a contentious issue. The risk is greatest when taking on a new hire as you are paying for potential performance based on prior performance, which is not a 100% predictor of future performance in a new role. Having the right strategy for each critical hire is an important predictor not only of the ability to hire the right talent, but also as a predictor of future success in the role.
Tailor your Remuneration Strategy per Role or Job Family
According to LinkedIn 2015 Talent Trends survey, 54% of all individuals list remuneration as their primary decision-maker for moving jobs. It is therefore critical to have an understanding of the specific external talent market when hiring key talent and skills, before defining what the right package and approach might be for attracting a new incumbent. Knowing which organisations or sectors have the best skills, how they are rewarding these individuals and what their total EVP is, and how this compares to yours, will enable your talent acquisition team to focus on hiring the right people, with the right differentiated offer. The best offers are those that are compelling to the specific candidate and speak to the realities of the specific talent pool. Attempting to utilise a one size fits all approach to attract differentiated talent will often lead to disappointment for all parties when an offer is made to a new candidate. Trying to rework offers often extends the process and eaves top talent frustrated and with a potentially “negative” perception of the organisation.
Know which league you want to play in and compete appropriately
Of equal importance is knowing what league one wishes to play in, when going after talent. Does your organisation, or the function you are recruiting for, require talent that differentiates, or has the capability to put your organisation at the forefront of your market? Premier league players often come at a premium but not all functions or organisations require, or are able to attract or afford, such talent. Being very clear on where you wish to differentiate and then focusing on bringing in the best skills and talent in those areas is a base for a solid talent acquisition strategy.
High Performance Organisations link Reward and Performance
Many high performance organisations have a strong preference for not paying a premium when it comes to fixed earnings, rather choosing to focus on significant upside, often in the form of bonuses, when individuals perform. This requires a far more intensive recruitment process, where many individuals are involved in “selling” the opportunity and the organisation. It also requires a high level of skill in assessing and recruiting candidates, not only from the HR team, but also from those executives or senior managers involved in the selection process. Key is that these organisations recognise that performance management is the basis of any good talent management process, and that they should aim to contract appropriately with candidates from the outset. That is, “this organisation is about delivering great performance, the expectation is that top talent performs and will be well rewarded if they deliver.” This performance-results focused value proposition can be appealing to candidates who are attracted to a strong challenge. Great candidates who know their value and delivery capability should see little risk in a rewards-based remuneration structure.
Ensure that you have an EVP that goes beyond reward
If negotiation with top candidates sticks on reward, this often does not bode well for fit and future success in a role. It begins to raise questions around the quality of the emotional contract that the potential future employee is making with the organisation from the outset. Ultimately, sustainable top performance is driven by discretionary effort, which goes beyond direct reward for performance. Top knowledge workers are motivated to apply discretionary effort when they are connected to a sense of purpose, have the right levels of autonomy and are encouraged to grow their mastery of new skills and challenges (Dan Pink – Drive). The ability to define what this would look like for a specific role, or an individual within one’s organisation evolves the negotiation into a conversation that taps into deeper and more sustainable motivational drivers.
Think Investment not Cost
It is important when viewing the acquisition of top skills to have a view that investing in the right skills and people, will in the medium to long term bring an exponential return to the organisation. It is individuals with these skills that lead teams, develop strategies, solve problems, innovate, give access to new markets and enable organisations to scale, and ultimately differentiate your team from your competitors’ teams.