Philosophy, Data and Structure; A Simple Guide to Executive Compensation


Executive compensation is at the top of your list of considerations when your company is recruiting. Hiring the most talented and aligned person for the job and retaining them—a simply stated goal that is far from simple. Compensation is a major piece of the recruiting puzzle. 

 

You want to position the role competitively vis a vis other companies to make sure you don’t lose your ideal candidate to someone else. To ensure a successful search, you’ll focus on three priorities:

  1. Having a clear compensation philosophy
  2. Evaluating all compensation data
  3. Proactively setting compensation boundaries and planning

 

Compensation Philosophy

Your compensation philosophy will be your north star, keeping you on track to your goal. There are numerous considerations—not everyone’s viewpoint is the same. Different businesses focus on a range of factors when establishing their philosophy. For example, does your organization believe that compensation drives performance or that performance must drive compensation? Does your organization place more value on best in class medical and retirement benefits? Those and many other theoretical positions will inform your compensation philosophy. 

 

There are many considerations as you establish a compensation philosophy. Questions to ponder are whether it’s important to: 

  • Align pay with your business’s annual and long-term performance goals
  • Ensure your compensation program is justifiable and equitable in a competitive market
  • Reward achievement, such as accomplishing specific objectives
  • Consider how you’ll balance base salary with short- and long-term incentives
  • Incorporate DEI values in your compensation scheme
  • Maintain internal equity across similar levels in different functions
  • Be a market leader, in the middle or follower with compensation for employees as compared to the competition

 

Once you come up with a compensation philosophy that will drive your recruitment and hiring, stay true to it.

 

Compensation Data

There are two basic ways to access current data about compensation within your field and in your part of the country. One is based on surveys and the other is real time data.

 

Surveys

Many companies will hire a consultant to conduct a compensation survey, looking at other companies in your industry that are commensurate in size and (if it’s important) operating in your geographic region. But those parameters can be misleading.

 

Consider whether you want to recruit from a different industry, believing that such an expanded search might bring in a skill set that will benefit you. You may be looking at companies that are larger and wealthier than yours, with the idea that the knowledge and experience of such a hire from one of those organizations will get your company to that next level. Most survey companies do not look at their targets through those lenses.

 

Surveys also cannot screen for businesses with a similar compensation philosophy. That information is rarely discoverable in public records for privately held companies, and we know that staying true to a philosophy is fundamental to a successful search.

 

A survey is definitely a piece of the picture, but probably the most notable issue with executive compensation comparison surveys is that there is a discrepancy between the actual market reality and the timing of the information they can gather. In some cases, by the time the survey is complete, the data could be antiquated for a variety of circumstance

 

Most executive compensation packages rely heavily on long-term incentive plans, but surveys mostly access information about base salary and bonuses. It is having a stake in the company that will drive executive wealth and spur the best candidates to join you, but except for publicly traded companies, information about equity is not disclosed. So how do you get accurate intel about what you’ll need to offer your recruits to get them to say yes?

 

Real-Time Data

The best way to get the inside scoop on executive compensation packages—including equity—is to work with someone who is close to the candidates - a search firm. Recruitment firms have a line on accurate, real-time information because they talk to candidates day in and day out, and though there are rules guiding what recruiters can ask, there is no rule about what a candidate can offer. It turns out, they tend to share this kind of information with recruiters.

 

If you want to have as much information as possible about what compensation looks like among the people you hope to recruit, combining survey data with the support of an executive recruitment firm should provide you a more accurate picture of the market.

 

Proactively Setting Compensation Boundaries and Planning

Once you have your compensation philosophy and the data you need to plan a winning compensation structure, be ready to make an offer. That means get pre-approval from your CEO, board, or whoever needs to sign off on compensation. And get it well in advance.

 

If your company uses a grading/leveling system to set compensation for each position, and the grade-range is out of line with what you know you’ll need in your recruitment, either adjust the candidate profile or use data to justify re-grading the position.

 

If your company is not yet able to offer equity, there are other ways to mirror that upside without an equity plan. If your targeted bonus range is lower than the market, perhaps adjusting the salary range can be the solution. to let you compete with bigger companies vying for the same candidate.

 

One of the most frustrating outcomes is to go through the entire recruitment process identifying the ideal candidate for the job—but there’s a gap in their compensation needs and what you have approved. If at this point you attempt to get approval to increase the compensation ranges, you’ll lose time, and all too often, you’ll lose the candidate as well. Once you have the candidate you want, you need to make a competitive offer fast. Good planning, understanding what you might be up against, and proactively addressing the issues before you conduct a search – make extending fast offer possible.

 

Pre-approvals are also important to consider based on the timing of conducting searches. If you are recruiting towards the end of the fiscal year, your best candidates may be a few weeks or months away from a sizeable annual bonus. You can either hire them with a delayed start date, having them sign a contract that begins after their bonus is earned and delivered, or, if time is of the essence, you can buy out the bonus they’ll be giving up with a commensurate sign-on bonus. Once you know who you want, use your compensation budget and flexibility to seal the deal.

 

Executive Compensation Can Move the Needle on Recruiting

The talent you are looking for is out there. Even if they are not knocking at your door, they are reachable—and hirable. 

 

According to a survey conducted by Experteer, 97% of sitting C-suite executives are very open to being head-hunted for relevant vacancies even if they are not actively looking. A discreet approach (the expertise of recruitment firms) often yields terrific candidates, but having something special to offer is going to be key. That includes a tempting position in an exciting, change-making, or up-and-coming company and a competitive executive compensation package to get it across the goal line.

                             

Understanding your compensation philosophy and sticking to it, leveraging real time market data to see the whole picture, and being ready and flexible with proactive planning, will put you and your organization in a better position to hire a quality leader who can take your business to the next level.


By Catherine Landgraf December 31, 2024
Senior Vice President of Operations ABOUT THE COMPANY A-dec is the premium leader in the dental equipment industry designing and manufacturing products that span dental chairs, lights, handpieces, furniture, air management, infection control and delivery systems found in dental offices and operatories. With over 1300 employees, and headquartered in Newberg, Oregon, A-dec’s familial culture and values have been attributed to their commitment to the Newberg community and its employees through various investments and programs. ABOUT THE POSITION The Senior Vice President of Operations is responsible for leading A-dec’s Manufacturing, supply chain, and planning functions to create a competitive advantage for the company for both existing and new products. Leading a team of Directors and Managers, this position ensures the continuing advancement of quality performance, cost effectiveness and safety of the manufacturing function while developing new ways to improve the service level for customers and meet the financial objectives of the organization. The Senior Vice President of Operations manages the manufacturing, supply chain and planning functions to ensure continuous improvement, employee engagement and talent development. DUTIES & RESPONSIBILITIES Participate as an active member of the executive leadership team providing the vision, leadership, and roadmap necessary to achieve the company’s strategic initiatives consistently and predictably. Define and communicate the vision for Manufacturing and visibly champion current and long- range objectives or programs to ensure successful implementation. Develop annual Manufacturing objectives and ensure tactical plans are executed throughout operations along with aligning metrics, employee goals, and visual dashboards to ensure business objectives are met within operational and regulatory boundaries. Define the skill sets and training programs required to produce increasingly complex products and maintain an effective talent base across the manufacturing, supply chain, and planning teams. Define and establish staff planning parameters necessary for effective operation of Manufacturing processes to include shift schedules, staffing levels, overtime limits, temporary employee ratios, etc. Provide direction, leadership and guidance to ensure relentless focus on delivering results and engage and empower team members to create a culture of safety, quality, continuous improvement, and personal development. Lead the development and implementation of the Manufacturing expense and capital expenditure budgets. Oversee the Manufacturing capacity plan and optimize utilization across Manufacturing while ensuring the production plan is achieved and meets the sales forecast in a timely manner. Lead Manufacturing Engineering in the transformation and optimization of Manufacturing areas to maximize quality, safety and operational efficiency. Lead the Supply Chain team on Production Planning and supply chain requirements to meet customer demands. Collaborate with cross-functional development teams to continuously achieve successful implementation of new or improved manufacturing systems and ensure utilization of capable, cost-effective production processes for manufacturing operations. Partner with Product Development and New Product Introduction (NPI) teams to ensure new product and innovation projects are executed as planned implementing manufacturing processes and testing to proactively resolve identified process capability conflicts. Work collaboratively across the broader organization to leverage corporate resources and align Manufacturing with top level initiatives. Mentor and coach talent across the business to ensure the organization is developing a pool of operational leaders. MINIMUM QUALIFICATIONS KNOWLEDGE, SKILLS AND ABILITIES Ability to create and communicate vision as well as understand the big picture and translate to application Ability to proactively identify, anticipate and resolve problems and be comfortable relying on instincts to make decisions Ability to work cross functionally with all levels of the organization Ability to motivate and engage the workforce, create effective teams and build peer relationships Ability to create and implement strategies Ability to initiate self-development Comprehensive knowledge of quality management systems/ISO, lean manufacturing, and the product development process Advanced oral and written communication skills with public speaking experience EDUCATION AND EXPERIENCE Bachelor’s degree in business or engineering along with relevant work experience required, MBA or M.S. in related field preferred At least 15 years of progressive leadership experience with 5+ years in a senior leadership position managing a similar scope and sized operations and manufacturing team. Experience in strategic planning for organizations of similar size and/or scope as well as managing the vision and purpose of a division and or business segment of an organization Strong project management experience Experience in mergers and acquisitions preferred Experience managing a vertically integrated operation preferred Experience leading corporate-wide projects or initiatives Medical device industry / dental or medical device fields experience preferred Experienced in establishing partnerships with other companies and external organizations preferred Interested in Learning More? 180one is a retained search firm and has been engaged by A-dec to manage this search. If interested in learning more about the opportunity, please contact Tom Haley / 503-334-1350 / tom@180one.com
By Catherine Landgraf December 30, 2024
We are pleased to announce we have recently been recognized as one of Oregon’s Most Admired Companies. The Portland Business Journal sent a survey to some 3000 CEO level executives asking them what companies they most admire in 10 different categories. 180one was selected as a finalist in the Recruiting/Consulting category and invited to attend the awards ceremony, where we stood out with the 9 th place spot. It was a great event to be honored at, and share the moment with our clients who were also recognized in the Top 10 of their respective categories such as A-dec, Hyphn, Salt & Straw, Leatherman, Columbia Sportswear, and R&H Construction.  When we started 180one in 2007, our main mission was to help Portland businesses grow and thrive by providing them the access to the executive-level talent they deserve. And do it in a way that allows us to truly partner with our clients and build relationships with them outside of any of the searches they engage us on – since we work and live in the same community as our clients. 17 years later, to be recognized today as a Most Admired Company by our clients is a testament to our team’s professionalism, how they’ve partnered with our clients, and the work they’ve performed on our clients’ behalf. Thank you to our clients for your support over the past 17 years, and we look forward to being your search partner in the years to come.
By Catherine Landgraf December 18, 2024
180one is pleased to announce our recent partnership with VSG and the resulting placement of their new Vice President of Sales and Business Development! Dover’s Vehicle Service Group is the global leader in designing and manufacturing vehicle service, collision and automotive OEM equipment. It is one of the founding companies of Dover Corporation, an eight billion dollar diversified global manufacturer. VSG consists of fifteen leading vehicle lifting brands (Rotary, Forward, Blitz, Ravaglioli etc.), collision repair (Chief), wheel services, diagnostics (Butler, Rotary, Chief and Ravaglioli) and tier-one automotive brands (WARN Automotive) with operations worldwide, including regional business operation centers and large manufacturing facilities in the U.S., Europe and Asia. Congratulations to VSG!
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