1 Performance-based pay

One of the most common and effective ways to link executive pay to your organizational performance is to use a mix of short-term and long-term incentives that are tied to specific and measurable outcomes. These can include financial metrics, such as revenue, profit, or return on investment, as well as non-financial metrics, such as customer satisfaction, employee engagement, or environmental impact. Performance-based pay can motivate and reward your executives for delivering results, while also holding them accountable and reducing the risk of excessive or undeserved payouts.

2 Pay transparency

Another trend that is gaining momentum in executive pay is to increase the level of disclosure and communication about how and why you pay your executives the way you do. This can help you build trust and credibility with your shareholders, regulators, employees, and customers, who are increasingly interested in how you allocate your resources and how you align your values with your actions. Pay transparency can also help you attract and retain talent, as well as avoid potential reputational damage or legal challenges due to pay disparities or controversies.

3 Pay equity

A related trend that is also becoming more important in executive pay is to ensure that you pay your executives fairly and equitably, regardless of their gender, race, ethnicity, or other characteristics. This can help you promote diversity and inclusion in your leadership team, as well as reflect your commitment to social justice and human rights. Pay equity can also help you comply with the laws and regulations that mandate equal pay for equal work, as well as avoid potential lawsuits or sanctions from the authorities or the public.

4 Pay agility

Another innovation that is emerging in executive pay is to adopt a more flexible and responsive approach to adjusting your compensation plans and practices in response to changing circumstances and needs. This can help you adapt to the volatility and uncertainty of the market, the industry, and the society, as well as to the evolving expectations and preferences of your executives. Pay agility can also help you balance the trade-offs between stability and variability, between short-term and long-term, and between individual and collective interests.

5 Pay customization

One more innovation that is gaining popularity in executive pay is to offer more choice and personalization to your executives in terms of how they receive and use their compensation. This can help you cater to the diverse and dynamic needs and goals of your executives, such as their risk appetite, their career stage, their family situation, or their lifestyle preferences. Pay customization can also help you optimize the value and impact of your compensation, as well as enhance the satisfaction and loyalty of your executives.

6 Pay technology

The last trend that we will discuss in this article is to leverage the power of technology to design, implement, and monitor your executive pay. This can help you improve the efficiency and effectiveness of your compensation processes, such as data collection, analysis, modeling, reporting, and auditing. Technology can also help you enhance the quality and accuracy of your compensation decisions, such as benchmarking, goal setting, evaluation, and feedback. Technology can also help you increase the security and compliance of your compensation data and transactions, as well as the engagement and education of your executives.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?