Show Me the Money!

Show Me the Money!

10 Oct 23 4mins Sarah Beauerle


The cost of living continues to rise, and so does the cost of talent. Since the end of the pandemic, compensation has taken on new dimensions, influenced by many factors that shape candidate expectations and our clients’ executive remuneration strategies.  

As executive search consultants, we occupy a privileged position, at the intersection of a global client base and executive-level candidate pool. Because of our neutral stance, our candidates are open with us about their expectations and what compensation would be compelling enough to warrant a career move. Our clients generally receive this information with slight skepticism (understandably), but our best clients demonstrate a willingness to consider innovative total rewards strategies to secure top talent.

We have seen a number of shifts, with traditional compensation models being re-shaped to accommodate changing priorities, economic challenges, and a heightened focus on equal pay and transparency.  

Below, we will explore what we have learned from our candidates and clients in terms of compensation trends and considerations, encompassing everything from the preferences of the most talented job seekers to the particulars of executive compensation packages. This includes the complexities of higher base pay, the allure of remote work, the importance of ESG, the impact of potential policy changes, and the increased importance of financial stability to attract and retain talent.  

Candidates are prioritizing: 

  • Pay Transparency There is a growing emphasis on pay transparency, making it important for companies to clearly communicate their compensation structures up front. This common-sense approach has many benefits, especially for women and underrepresented groups, who may have experienced pay inequity or continue to be undervalued if using outdated benchmarks.  
  • Cash vs Equity-Based Compensation Candidates across the board are expressing a preference for organizations with historic stability and more traditional, cash-led compensation structures. This preference often outweighs the unknowns of equity-based compensation, which can be far less certain. This is particularly true for leaders in private equity-based businesses hit by the pandemic, who have missed out on an exit and are now being asked to strap themselves in for another five or more years before a transaction occurs. 
  • Importance of Remote/Hybrid Work Remote and hybrid work options have gained importance, with many candidates valuing flexibility and improved work-life balance. For organizations (rightfully) focused on recruiting or retaining women and underrepresented people of color, the flexibility of a non-traditional workstyle can outweigh monetary compensation. However, there is a caveat: employees expect all work-related travel to be covered, including travel to the office. 
  • Relocation Expectations If candidates are required to relocate for a new job, there is an expectation for the employer to cover the full cost of relocation. This has become a significant factor in attracting candidates, and their families. A newly hired leader will be more successful if their family feels supported and engaged throughout the process. To that point, it is a challenging ask for a candidate to relocate for a role for which they will have to travel regularly (say, above 20% of the time). Additionally, companies should consider flexibility, with the allocation of the relocation benefits to accommodate each individual’s situation. A lump sum can be more meaningful than other payout options. 

Clients are prioritizing: 

  • Higher Base Pay and Merit Increases To keep in step with the higher cost of living and retain and attract top talent, there is a trend toward higher base pay and merit increases. Certain functions are in strong demand and top performers are being wooed by external opportunities while feeling the pull of retention incentives to stay put.  
  • Equity-Led Packages Equity packages at executive level are becoming more complex and substantial, particularly in the United States. Candidates from corporate backgrounds might find it challenging to comprehend an equity-led compensation package, as such packages are tied to the (unknown) future performance and success of the organization. Understanding how equity works and its potential value requires careful consideration and education. 
  • Trust In a growing number of cities and states in the United States, it is illegal to ask a candidate about their current compensation package. With no option but to comply, companies are demonstrating a greater deal of trust than they have historically when navigating offers. 
  • The Importance of ESG Environmental, social, and governance (ESG) considerations are also impacting compensation decisions. Companies are aligning executive compensation with ESG goals to demonstrate commitment to sustainability and responsible business practices. 
  • Employee Wellbeing For employers that truly care about their employees, prioritizing mental and physical wellbeing will continue to be a trend, from offering practical and financial support to time off. 

The market for the very best executive talent remains extremely competitive, and organizations need to be mindful of compensation trends and candidate preferences to attract and retain it. Companies can differentiate themselves by embracing a modern and flexible total rewards approach that includes not only monetary elements, but also compelling work arrangements, benefits, stability, and growth opportunities.