Communicating Executive Pay

With all the media attention on the AIG bonuses, more workers may become disengaged, depressed or even angry about the wide range in workers' compensation.

Gerry Miller, managing partner of DolmatConnell & Partners in Waltham, Mass., says thousands of CEOs and U.S. boards "try to do the right thing. You don't hear about them; instead you hear about ridiculous abuses of shareholder trust."

This could become a growing morale issue faced by HR, especially if annual increases are suspended and general bonus pools are eliminated or reduced for many employees. How can this sentiment be managed?

Don't over-communicate

Keep an ear to the ground to see if this is an issue rising in your workplace. Only take steps to address if this is a concern among employees and is becoming disruptive in the workplace. Typically, there are always a percentage of employees who are disgruntled about what other people earn. You need to look for something above and beyond the normal chatter.

Make sure your house is in order

Ensure that your compensation plan is documented, understood by all employees and managed according to the compensation policy. Any changes, like salary freezes and other bonus and compensation, should be communicated formally, clearly and with timeliness. Employees need to plan accordingly.

Campaign for the executives

Without getting into financial details, develop a plan to tell the executives' stories. How did they start the company? Where did they go to school? How did they climb the corporate ladder? Tell the story in a tone that is helpful to employees and educates them about what it takes to be a CEO.

In most cases, executives started out in the rank-and-file like many other employees. Include what executives do on a daily basis, what they are accountable for and how they developed the vision and goals for the organization. 

Beef up mentoring programs

Encourage top executives to join the mentoring program or, if no program is in place, start one. Executives and managers alike can help employees who wish to advance to the next level obtain their goal.

Communicate rewards programs

If you provide other non-monetary incentives to employees, make sure they are communicated clearly with details on what the rewards are and how they are earned. If you have programs that have lost momentum, breathe new life into them.

Rewards like time off, gift certificates, gym memberships and premium parking spaces can all help keep employees motivated.

The goal is avoid a class warfare in the workplace. The differences in earnings will always be there. That is the motivation for U.S. companies to be competitive in a global marketplace and keep employees motivated to work hard.

Compensation is the reward for those successes.

Companies can take steps to reward hard-working employees, while educating all employees on the accountability our nation's executives hold and what they did to earn that responsibility.

Comments

[Karen]

This is very insightful and an angle you don't usually read about. I think it's a difficult sell, but if it's worded correctly and presented with compassion and truthfulness, it could have a positive impact.

[F1tawson]

Looks like the government is going to have its say about executive pay. Let's just kill entrepreneuralism and pay everyone the same. Then we can watch China and Japan walk all over us. Idiots.

[Christine Miller]

Karen, I agree that this is a difficult sell. This has to be very thought out, before launching these type of communications.

F1twson, We are not there yet. Don't throw in the towel. It will be interesting to see what insurance companies do with the latest request to report salaries over 500K and company outings.