Organizations hoping to hire executive-level talent in 2022 are facing one of the most difficult labor markets in a generation.
Just a few of the challenges include:
- More available jobs than candidates
- Competition from players outside your region
- The proliferation of private equity in the middle market
- Increased priority on non-economic value drivers like remote work
Facing unparalleled struggles to attract new leaders, companies are getting creative in how they craft their executive compensation packages. Here are a few observations we’ve seen over hundreds of searches in the past two years.
For an executive to make a change in this market, the base salary offered must be 15-20 percent higher than their current position—lowballs or value plays simply won’t work if you’re looking for top-performing talent.
New Ways to Compete
Organizations that may not be able to compete in terms of base salary or equity are finding other ways to give candidates more. Signing and sale/transaction bonuses are getting bigger and more commonplace, for example, and there is increased usage of structures like long-term incentive programs (LTIPs), phantom equity, monthly allowances and relative performance awards that help keep people incentivized—even if the company as a whole is underperforming.
Money Isn’t Everything
Non-economic values have become increasingly important over the last two years. As candidates have a broader pool of opportunities to choose from, they’re able to make additional considerations like where they work, who they’re working with and the environment in which they’re able to work. Great benefits and leave policies may also sway someone’s decision to interview for your company.
Rise in Transparency
Coinciding with the increase in bonuses, organizations have a sizable edge with candidates if they’re transparent about how their bonus structure is calculated. There is a purposeful move away from subjective bonuses to more quantified, data-driven models—often split between company performance and individual metrics, goals and objectives. If employees and candidates see their bonus coming downstream, they’ll be able to do the calculations themselves to see where they stand.
Knowing What to Offer
There is no one-size-fits-all compensation package that will magnetize every leader in the market to your organization. What resonates with one all-star candidate may fall flat with another. Knowing what to offer depends on the competitive nature of the search, the circumstances of your company, and the stated goals and objectives of your team.
This market requires equal doses of flexibility and creativity to develop a compensation structure that works for the individual, while also working within the construct of your company.
As a search firm with extensive experience advising clients on how to make the best offer for the best candidate, Townsend could be your secret weapon in successfully placing your organization’s most critical roles.
Get in touch with search professionals who aren’t afraid to tell it like it is—experience The Journey to placing top executive talent, customized to any and every work structure your organization offers.