We’ve all heard the one about the CEO who was asked how many people worked in his organisation. “Oh, about half of them,” he replied.
Joking aside, how true is this within your organisation? If you don’t know chances are it’s not being measured or at least not being measured in a way that gives you the same top line data such as profit, debt days outstanding and units shipped. It’s interesting that many organisations just don’t know, even when perhaps half of their salary bills, their biggest costs, are going on people either not contributing
– what we call non-engaged – or, worse still, those who are actually pushing in the wrong direction. In other words, actively disengaged.
After all, who needs competitors if you’ve got actively disengaged employees on your payroll?
All of our research shows that employees want to work and want to work hard, it’s what human beings naturally want to do. That’s the good news. Given that the vast majority of us want to work, what then is the driving force behind those that want to work in the same direction as the employer and those that don’t? That’s the question a good engagement study seeks to answer. And the answers matter. A well aligned workforce results in better bottom-line performance. It delivers higher scores on pretty much any business critical key performance indicators you care to mention, whether they be profit, innovation, safety or anything else. It also means comparatively better share performance.
To the question of whether employee engagement matters to the CEO the answer is undoubtedly ‘yes’. Highly engaged workers make for better business outputs, more loyal customers, fewer ‘problems’ and better financial performance. What’s not to like?
For many organizations developing business strategy is just the first step. Putting that strategy into action often proves difficult, if not impossible, to do. Hay Group works with CEOs and business leaders to help them bridge the gap between strategy and execution.
Together with clients we build a blueprint for the organization and we bring that design to life. We help our clients to clarify their strategic objectives and operating model, identifying the organizational structures, management systems, processes, jobs, culture as well as people capabilities required to deliver it.
We have a clear understanding of what motivates people and how work is most successfully designed. Using this knowledge, we help clients build an effective organization that engages leadership and energizes employees, driving performance and delivery.
The average CEO compensation in the country has crossed the Rs 2-crore mark on a cost-to-company basis.
In a study by global management consultancy firm Hay Group on Top Executives Compensation, it was found that at larger and more complex organisations, the compensation exceeds Rs 7 crore.
For the next level of top executives (excluding the CEO), the compensation is above Rs 1 crore on a CTC basis. The Top Executive Compensation Report 2011-2012 is based on insights from 87 organisations across sectors, analysing compensation practices of top executives — CEOs, their direct reports, and heads of businesses as well as functions.
Mr Sridhar Ganesan, Rewards Practice Leader, Hay Group, says: “The Indian CEO market has always seen a large pool of ‘operationally-excellent’ CEOs, but a scarcity of ‘managing-business’ CEOs which has driven compensation high.”
Also, the compensation is expected to spiral further due to increasing cross-sector employability of CEOs called the ‘lateral CEOs.’ “A broader landscape of opportunities, coupled with the scarcity of ‘holistic’ CEOs, will drive executive compensation northwards,” he added.
The average CEO’s salary is 2.6 times that of the rest of the executive population, in terms of total CTC, excluding long-term incentives. But there is very little total compensation differential between top executives across core (head of sales and marketing, had of manufacturing, operations and business heads) and enabler functional roles (HR Head, Chief Information Officer, R&D Head).
There is also a growing focus on performance, leading to a more pronounced variable pay component in overall compensation. The study finds variable pay as a percentage of fixed CTC to be in the range of 15-30 per cent.