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CEO Remuneration 2022: What Matters Most Post-COVID-19

Jan 03, 2023   •   by Proshare Research   •   Source: Proshare   •   eye-icon 274 views

Download the Full PDF Reports Here:

  1. CEO Remuneration 2022 Report: CEOs in a Post Covid Era - What Matters Most
  2. Executive Summary - CEO Remuneration 2022: CEOs in a Post COVID Era - What Matters Most

 

Conclusion – CEO Activism: What Matters Most Post-COVID-19

 

CEO Activism: A Race Against Time

As global inflationary pressures and exchange rate movements force Chief Executive Officers (CEOs) to contemplate the next moves concerning human capital compensation, they must think fast and hard about the future. They must also think of new actions to ensure corporate sustainability in economic, social, and governance (ESG) concerns. 

 

The CEO's job has recently become more complex, with headwinds pressing in from different fronts. However, while old challenges fester and remain essential, the new challenges of retaining talent, adopting new technology, and the rising cost of giftedness become critical. Further, high labour mobility, new work dynamics (virtual vs physical), and changing consumer fulfilment requirements make the CEO's job as pliable as a calisthenic guru; flexibility and agility become critical talents.  

 

In the new era, the CEO cannot pass on the technology responsibility to 'IT.' The 'IT' executive must be a board member with board-level responsibility. However, the CEO must know the direction of technology evolution, if not the nuts and bolts of tech applications and deployment. The CEO must be the cheerleader of the tech team and ensure that the effects of uncertainty on corporate objectives are tackled. In the broad scheme of things, corporate chiefs must appreciate their history but work from imagination if they are to support their companies' sustainability. The future nods to the past but handclaps to the envisaged consumer journey experience yet to exist. The art of meeting the unexpressed demands of consumers will separate corporate laggards from winners. In doing this, companies require artificial intelligence and machine learning (AI/ML) to enhance product and service development.

 

Uncertainty will be a key underlying feature of the future consumer marketplace, but this should not be feared but embraced. As was pointed out in the executive summary of the report, the effect of uncertainty on corporate outcomes is not a jail sentence; it is a call to action. CEOs will need to raise their skill levels to cope with rapidly changing markets and faster-changing customer expectations. 

 

In addressing what matters in a post-COVID-19 era, companies need to do the following:

 

  • Become agile- assert a forward-looking approach to customer needs by pre-empting them rather than responding to the observed changes. The method is like the "blue ocean" strategy of creating uncontested markets. Still, it differs because, apart from making the competition irrelevant, it focuses on the consumer and aligns corporate action with the predicted needs of end users rather than their current situations. The consumer as king moves from being a maxim to a series of processes and procedures that satisfy their anticipated journey experiences.
  • Take technology as a part of the business and not as an add-on. Companies must see technology as part of the customer satisfaction journey and not as an add-on to the old ways of meeting customers' expectations. Technology must be on the shop floor, understanding the customer and providing information to improve customer service or product experience. Customer feedback creates a loop for creating enhanced services or products. The new approach towards the customer would require rethinking and reworking the corporate culture (see illustration 13 below).

 

Illustration 13:

  

  • The CEO's most prized asset is their staff. High-quality workers are becoming "fungible" or flexible across and within an industry. Quality talent attracts premiums, and the CEO must pay higher wages to retain top-grade staffers that can drive earnings. In an inflationary environment, upward pay adjustments put considerable pressure on the corporate bottom line. Balancing the need for acceptable returns on shareholders' funds while meeting the monetary demands of an expectant workforce will be critical to the success of companies in a post-COVID-19 era. In this context, agile companies may need to look beyond the pay cheque to keep workers happy and design templates that give workers non-pecuniary compensation that meets their lifestyle expectations. 
  • The pay packet of CEOs will increasingly reflect ability, foresight, and managerial capacity. The freebie-guzzling CEO era is over. The corporations that will be around tomorrow are those that work hard today. Free-riders will spin off the market freeway as consumers exacting service standards and expectations punish charlatans and reward real McCoys. 

 

The last two decades have seen a spirited rise in the pay packets of CEOs, some merited and some not-so-merited. However, in the general course of business growth, the CEO of tomorrow must prepare today to act differently. In a post-COVID-19 corporate world, these are the things that matter most. 

 

 

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