Musings of a CEO Headhunter

How compensation decisions make or mar hiring outcomes – Part 2

As mentioned last week, compensation decisions can make or mar hiring outcomes.
Last week’s example was that of one, where a promoter took a long-view and made an offer closer to the candidate’s expectation. The thinking, as explained by the promoter himself, was that he wanted the candidate to come in happy and ready to deliver. Apart from the overall compensation number itself, there was no need to structure or rework significantly. But that’s not always the case.

We had another client case, which did call upon many elements – alignment on the overall compensation, reworking the compensation structure itself, and specific soft interventions, to clinch the deal. Remove any one of these elements, and the hire may not have happened.

As context, the client, an Indian promoter company, was looking to hire someone to steer a large P&L, leading sales from the front. After going through a few options, client shortlisted a candidate who was based outside India (the P&L was also outside India).

The key issues standing in the way were

the candidate’s compensation ask was higher than originally planned or budgeted

candidate lived in a country where the local laws were quite different and due to business reasons, it was decided to continue with the same country instead of relocating to India

with the hiring happening towards the tail end of Covid, in-person meetings were disrupted

Again, the client took a long-view of the ask to align on the overall number, but we structured the payouts differently by including newer compensation elements as well as linking it to specific events and outcomes, moving to a contractual engagement rather than an employment. Finally, since there were so many moving parts in the compensation itself and the in-person meetings had been disrupted by covid, the CEO flew out to meet the candidate to give and get comfort. As said earlier, remove one of these interventions and the deal would not have closed.

In both this week’s example as well as last week’s example, the common thread is how companies take a longer view of the compensation ask while deciding to go ahead or not, with the selected candidate.

If the Indian economy even continues on the same trajectory, the need for good talent at the CEO, CFO and other CXO level is going to get intense. This is despite that fact that 76%+ of the CEOs are elevated into the role and only 24% are hired externally (check comments). That’s not the case with CFOs though as my colleague Saroja, the CFO Practice lead at Resource Bridge observed, ~50% of the CFOs are hired from the market place. So, the pressure is immense.

In this context, it is important that clients enter the fray with a long-view as well as the mindset to work with the executive search firm to create new compensation structures that balance competing demands.

Article by Ram K 

CEO lead at Resource Bridge India

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