Tool Box
Issue No. 51 - February/March 2010
Time to rethink remuneration strategy
This year has seen an unprecedented change in the way remuneration is managed and how organisations have reacted to a changing economic environment. Past years have been characterised by ever-growing executive salaries to satisfy demand for people - creative attraction and retention payment schemes, long-term incentives, and share option plans that were driving significant potential individual wealth on the back of a bull market.
The threat of an economic crisis has changed the remuneration landscape considerably. So what has changed? The most immediate impact has been a tightening of the annual salary review process.
Our research has shown a large number of organisations have either deferred their salary review for this year, announced a salary freeze or have reduced remuneration for some higher paid executives. Remuneration polices have changed - where many organisations would provide the same increase to non-award staff as they did to staff covered by Enterprise Agreements, many have taken the opportunity to de-couple the two groups. While this provided some short-term savings the bigger issue will be how to manage this in 2010 and beyond.
Short-term incentive schemes based around financial targets have delivered very little, or no payment to key staff. This has been in contrast to previous years where schemes have delivered solid outcomes and have become part of the “expected” remuneration for participants.
While this income loss has been ex...
