The Connection Between Compensation and Profits

By January 23, 2015 No Comments

By: Maurice Gilbert, Managing Partner of Conselium Executive Search

moneyBecause the cost of losing top talent is high, so too is the incentive to retain those star performers.  And when competitors are attempting to poach the best of your team, you may find yourself exploring many options for keeping staff on board, from offering promotions to inflating their job titles to increasing salary and benefits.

Yet the link between HR strategies and the bottom line has historically been fairly tenuous.  A recent study published by Towers Watson suggests, in short, that paying executives base salaries above the median rate is a flawed talent management strategy.  However, among the best performing companies, it’s common practice to offer higher-than-average total compensation packages – that is, base salary plus bonuses – indicating that these organizations pay their executives relatively large bonuses.

So, while offering larger base salaries may be an effective tool for attracting talent and even retaining them in the short term, the better driver of long-term performance appears to be in providing larger bonuses and incentives.  Does your firm’s compensation strategy mirror this finding?  If not, perhaps a change is in order.  Greater profitability could be just around the corner.


Maurice GilbertMaurice Gilbert is Managing Partner of Conselium Executive Search, which specializes in placing Compliance Officers and Legal Counsel for clients in the U.S., Europe, Latin America and Asia Pacific.  Maurice is also CEO of Corporate Compliance Insights, a worldwide publication devoted to governance, risk and compliance issues. Maurice can be reached at maurice@conselium.com or maurice@corporatecomplianceinsights.com.

Published by Conselium Executive Search, the global leader in compliance search.  

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