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Future of remuneration and leadership – change is inevitable

MAIN IMAGE: Chris Blair, Master Reward Specialist and CEO of 21st Century

Chris Blair

Remuneration and management policies are evolving. Any remuneration committee that doesn’t pay attention may find their company at a loose end. Wage inequity is an ongoing debate in South Africa and the jury is still out about what constitutes a living wage.

The wage inequity debate is multifaceted. There is both vertical and horizontal inequity that needs to be addressed, vertical meaning pay gaps from the top to the bottom of any organisation and horizontally being gender, race, culture, religion or performance-based, anywhere that prejudice exists between employees and employers.

Executive boards and remuneration committees are faced with an environment where they need to mind their surroundings and be more accountable than they have ever been before. It isn’t all about the bottom line anymore. The modern executive is expected to be more ‘human’.

In our current reality, directors are facing a more informed public. Both internally and externally, management teams are having to consider the consequences of their actions. From an external point of view, social justice and environmental concerns have taken centre stage.

Internally, broad-based talent retention, new working models and employee wellbeing are just a few of the factors in the ongoing juggling act. Beyond that, Covid-inflicted supply chain concerns, inflation and a plethora of socio-economic forces are at play. So, where does it all end and what exactly would a successful executive case study look like?

Out with the old…

In the age of transparency and open communication, with the Companies Amendment Bill set to make executive pay gaps public knowledge, executive compensation structures are likely to be in for an overhaul. And over and above laying the wage gap bare, attracting, and retaining the right CEO is going to require some creative thinking and flexibility.

Revised pay models could take shape at various levels, not just executive. Many private equity pay models, for example, reflect lower cash compensation with higher long-term, equity-based compensation – like stock or profit share – and this has been shown to work in several instances.

ESG conversation

Environmental, social, and governance (ESG) awareness are more widespread than ever before. Executives should be closely examining the ESG factors that affect the organisation – both on the inside and out. Governance at board level and executive level, risk management, compliance, behaviours, ethics, values, and culture are all in the spotlight.

Socially speaking, ‘CARE’ is the word of the day. Leadership must be more mindful than ever before of injuries, illnesses, exposure to harmful substances, workplace policies, gender balance, diversity and inclusion, employee engagement, employee voluntary turnover, training and development, behaviours, ethics, values, and company culture.

Leading from the trenches

The South African workforce is in a state of flux. Employers are no longer a law unto themselves. Far from it, openness, inclusion, and flexibility foster loyalty, productivity, and retention. Employment and pay are two-way negotiations and output is directly linked to a more satisfied, adequately compensated staff complement.

“The ‘servant leadership’ culture creates a meaningful connection that binds all levels of an organisation and breaks down silos. A servant leadership team observes, listens, validates opinions – even from those far subordinate in the hierarchical structure – and encourages a transparent culture characterised by trust and empathy. This approach fosters belonging, inclusion and ultimately better retention.

We never know what the next crisis on the horizon may be. But companies that stand the test of time weather whatever storms erupt by being agile, open, and showing empathy to every stakeholder in the company.

Quality leadership

Successful organisations are differentiated by successful people. Before any compensation practices can be addressed properly, leadership, board members, shareholders and stakeholders must share a common culture and the desire to do better for the greater good of the company. This logically leads to better performance across the board and greater rewards for everyone.


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