Barcelona and Real Madrid are dominant forces in world soccer as well as domestically in Spain, but what role does reward management play in their success and what can organizations learn from their successful team reward strategies? With organizations increasingly utilizing team work in order to increase company performance and competitive advantage there are some key lessons that they can learn from two of the most successful teams in world sport today.
Key Topics: Team performance; Pay-for-performance; Pay dispersion, Merit pay; Bonuses
CEO compensation packages are becoming increasingly standardized, for various reasons, including the growing influence of external bodies on company boards of directors. A study of US CEOs over a 7-year period, which examined the relationship between CEO compensation effectiveness and their tenure, found that the motivation inducing effects of different compensation components differed depending on how long CEOs had been in their role. The results suggest that standardization of CEO compensation is not an optimal compensation strategy for companies to follow.
Key Topics: CEO tenure; CEO compensation; Shareholder returns; Performance-based compensation
The prevalence of employee ownership in companies has been on the rise in recent years, with companies increasingly using long term incentives and employee stock ownership plans in the belief that it will increase company performance. A comprehensive study across 14 countries looked to examine the validity of this apparent positive link between employee ownership and company performance. The results did indeed find a significant relationship between these two factors, and this positive relationship held across both publicly and privately held companies.
Key Topics: Employee ownership; Long term incentives; Company performance
In many countries, gender diversity in the workplace is a hot topic and the role of women on corporate boards and compensation committees has come under scrutiny from regulators and legislators. A recent study of US companies examined the effect of compensation committee gender diversity on CEO compensation. Unsurprisingly, women were found to be underrepresented on compensation committees, however of the female members that there were, they were found to be younger and less experienced that their male counterparts. Additionally, greater gender diversity on compensation committees was not found to significantly influence the determination of CEO compensation.
Key Topics: Compensation committee; Gender diversity; Executive compensation; CEO compensation
The role of long term incentives, particularly equity holdings, in the decision making of CEOs has long been an area of interest for researchers and practitioners alike, given the potential significance of this relationship in company performance. A recent study of CEOs of US companies examined how a CEOs stock option holdings can affect their preference for short- or long-term strategic projects. The study found that when CEOs have accumulated stock option wealth, their likelihood of investing in the long-term increases, however when they have a large amount of recently granted options CEOs are more likely to prefer short-term projects.
Key Topics: Executive compensation; Stock options; Long term incentives; CEO decision making; Temporal orientation
With equity-based compensation becoming increasingly prevalent below senior management level in companies, a recent study looked at the relationship between equity-based employee incentives and cross-business-unit collaboration in multi-business companies. The results indicate that providing more junior level managers with equity incentives, in addition to profit-based incentive compensation, can elicit higher collaboration. The findings also suggest that equity-based incentives are generally of greater benefit to large companies in high-growth sectors, for companies chasing a related diversification strategy, and in stock market growth periods.
Key Topics: Equity; Long term incentives; Collaboration; Teamwork
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