How can you communicate executive pay to boost employee morale and motivation?

2 What to communicate about executive pay?

The content and level of detail of your executive pay communication will vary depending on legal obligations, organizational culture, and stakeholder expectations. Generally, you should communicate the structure and components of executive pay, such as base salary, bonuses, stock options, benefits, and perks; how each component is linked to performance, strategy, and market benchmarks; and the governance and oversight of executive pay. Additionally, you should discuss the impact and value of executive pay, such as the contribution of executive leadership to organizational goals, the alignment of executive pay with stakeholder interests, and the social responsibility and sustainability of executive pay practices. It is also important to highlight any positive outcomes or achievements that executive pay has supported or incentivized.

3 How to communicate executive pay?

The mode and frequency of your executive pay communication will be determined by your audience, objectives, and resources. However, some general principles include communicating honestly and transparently with accurate and reliable information that is consistent with public disclosures. Additionally, you should use plain language and visual aids to ensure simplicity and clarity. Moreover, it is important to consider the perspective and emotions of your employees and respect their feedback and opinions. By doing so, you can anticipate their questions and concerns while also inviting them to share their views and suggestions.

4 Who should communicate executive pay?

The messenger and the tone of your executive pay communication can have a great impact on how your employees perceive and react to it. Thus, it is essential to choose wisely who should deliver and support your executive pay messages and how they should do it. For example, the CEO or board chair can communicate executive pay from a strategic and visionary perspective, emphasizing the alignment and accountability of executive leadership. Additionally, they can express gratitude and recognition to the employees while showing humility and responsibility for their own compensation. The HR or compensation committee can communicate executive pay from a technical and factual perspective, explaining the methodology and criteria of executive pay decisions. They can also provide resources and guidance to the employees, addressing their queries and doubts. Managers or peers can communicate executive pay from a relational and motivational perspective, reinforcing the culture and values of the organization. They can create a dialogue and trust with the employees while encouraging their engagement and performance.

5 When to communicate executive pay?

Carefully planning the timing and frequency of executive pay communication is essential for employees to absorb and process it. For example, you can use annual reports or proxy statements as a reference and source of data for your executive pay communication, highlighting any changes or trends and explaining the reasons behind them. Additionally, you can use annual meetings or shareholder votes as an opportunity to communicate executive pay information, sharing the results of the vote and discussing the actions you will take. Finally, performance reviews or salary increases can be used as a context and comparison for your executive pay communication. This allows you to demonstrate the link between executive pay and employee pay, showing that they are aligned and fair.