Which Way to Pay?—Taking a smart approach to rewarding results

Negotiating an executive pay package is often the crux of the hiring process. It affects not only the expectations of the new talent and the hiring manager, but also the outlook of other employees throughout the organization. To ensure long-term success, there are a number of elements beyond the bottom line that job candidates and their employers should consider when addressing compensation.

The right mix

Leaders gravitate toward opportunities that reflect the way they work. Compensation reflects culture, and the balance of base pay, bonus and benefits should be a reflection of both the position and the company. For example, strategic thinkers looking to make a long-term impact will be attracted to different incentives than leaders driven to close the next deal and be rewarded immediately. An established company will need different ways to attract talent than a start-up with less certain, but potentially larger, growth potential. Someone who thrives in a high-stakes, fast-paced work environment will find the pursuit of bonuses much more rewarding than a fixed salary, even if the total amount of compensation is comparable.

Align expectations

Well before the salary negotiation, it’s helpful for both candidates and their potential employers to lay out what they expect regarding employee performance, business culture, professional development and pay style. No employer wants to offer more than necessary. But it does no good to reach the end of an arduous search and interview process only to find the company and the candidate have incompatible visions of compensation.

Be consistent

It’s tempting to drive a hard deal in salary negotiations in a down economy or a bad business environment, but a longer-term outlook is important. If new hires, their positions and their compensation are thoughtfully matched from the beginning, high-value employees will note the consistency and fairness of executive compensation when they make their own employment decisions. Keeping pay policies consistent in slow times also helps keep people from jumping ship as soon as the economy improves.