Writer Tal Ben-Shahar in his book ‘Happier' spoke of the ‘arrival fallacy’, a concept that some CEOs are probably familiar with. After having worked for years to reach the top, the pinnacle can quickly feel like a let-down for HiPOs. When you are trying to woo top performing senior executives, welcome bonuses and golden hellos are no longer enough. Organizations need to understand and capitalize on the fact that they are also probably looking for the ‘next big thing’. It is not just about what they can do for the business, it is also a lot about what the business can offer them. Companies need to go beyond the obvious and make them an offer that’s hard to resist. Here are just some ways in which enterprises are luring senior executives who seemingly have it all:
The days of bonuses and stock options are passé. Most CEOs already have attractive pay packages and while it is still a big consideration, it is no longer the only one. To hire HiPOs with proven track records, be willing to share a percentage of the profits with them. A German Greenfield manufacturing company setting up its operations in India wanted to grow its business fast. It also needed its CEO to stay with the company for a minimum of three years. Sharing profits ensured this happened. Research shows that 39% top executives quit new jobs within the first 18 months due to a variety of reasons. Profit-sharing provides a strong incentive to stay on. Apart from wealth creation, it also offers CEOs the risk and thrill of entrepreneurship, making it an attractive proposition all around.
Variable pay has become a game changer in CXO compensation, going up as high as 200% of the commitment when performance is above par. Not putting a cap on variable pay is a win-win situation as it reduces the fixed pay component for companies and incentivizes the CEO to push for excellence. RPG Enterprises, an Indian industrial conglomerate with interests in infrastructure, IT and tyres pays its leaders 180% of the variable pay at peak performance. Instead of simply doling out a stretch variable however, companies will have to strike a balance by considering their need for retention. The goal needs to be high enough to require extra effort, but not so high as to be unrealistic. Constant appraisal and feedback ensure that CEOs are in the loop on what to expect. Too high a variable percentage in the pay mix can be a deterrent to CEOs who may, after all, be powerless in the face of a country-wide recession or other unforeseen circumstances.
organizational backing and peer support
This element is perhaps not stressed enough in all the hullabaloo that accompanies hiring a CXO. 75% of the CEOs who quit their jobs too soon do so as they are unable to establish a cultural fit, and 52% fail to build a sense of team empathy with staff and peers. Being a CEO is a difficult task and it often gets very lonely at the top. A CEO’s success is closely linked to the backing and support he/she receives from the board and other senior colleagues. Effective onboarding programs, support and commitment from the board and senior leaders of the organization are crucial in not just attracting the right candidate but also contribute to the CEO’s success.
lure them with the intangibles
While money can definitely attract top talent, CXOs are not always lured by the extra cash according to the Forbes Coaches Council. Instead, they suggest that the thrill of the unknown, an opportunity to contribute meaningfully to society or to be a positive influence in the lives of others can be powerful incentives.
the opportunity to contribute to society: Allow CEOs to use their expertise for a good cause at full pay. If the company already has a CSR project, they could be tasked with contributing meaningfully to this; they could even kickstart the company’s new CSR initiative. Alternatively, encourage them to offer pro bono consulting to charities of their choice. Such roles provide CEOs with opportunities to network, gain skills in fields outside their regular scope of work and develop a broader understanding of life beyond the confines of their business.
the prospect of being a role model: CEOs who have made a mark in business may be attracted by the possibility of becoming a role model. Mentorship is a unique relationship that allows top managers to emerge as inspirational leaders. Some CEOs like KV Kamath of ICICI Bank had a natural flair for mentoring others. Several notable names in the banking industry consider him their primary ‘guru’ and mentor.
the opportunity to become an influencer: Some companies allow their CEOs to emerge as social media rock stars. T-Mobile’s John Legere uses social media to flaunt his personality, while also posting about T-Mobile’s products. Companies are often fearful of allowing their CEOs to assume an identity larger than their own, and yet, marketing wisdom tells us that consumers relate better to brands with strong personalities behind them.
the thrill of the unknown: Sometimes, just being part of a new vertical can be an appetizing proposition in itself and more than 65% CEOs have evinced a keen interest to switch their fields. They can also be allowed to head incubation divisions or the freedom to fund start-ups. Besides qualifying as CSR spend, CEOs get to put their legendary gut instincts to good use and feel great about it. For instance, e-Choupal, the world’s largest rural digital infrastructure, was originally conceived by an employee of ITC Limited, whose Chairman Yogesh Chander Deveshwar, approved a grant of Rs.50 lakh to test an idea. Today, e-Choupal reaches out to over four million farmers.
Most people, including CXOs are happier during the journey than when they reach their destination. This is because the brain releases more dopamine— the ‘happy hormone’— when one is pursuing a goal than when it has been achieved. Organizations that understand this and cash in on this element of human psychology will likely make the right moves in attracting top talent.