The importance of realism when it comes to executive salaries
When it comes to executive search, there’s an important recognition that needs to be made: you typically get what you pay for. That doesn’t mean paying over the odds, far from it in fact. It means paying what a candidate is worth based on your industry, business and goals.
It’s easy to underestimate the market value of experienced executives. When budgets are tight, senior positions can often be prime targets for cost-cutting. But this myopic approach risks attracting the wrong calibre of candidates. It also makes it difficult to retain existing staff who could be driven away by lower salary rates.
Therefore, it’s vital for employers to realise what it takes to secure the very best executive talent. Not only is it essential to offer competitive salaries that meet their market value, but it’s also vitally important to provide a comprehensive package of benefits that will ensure your company can attract and retain top-level executives.
We realise that this topic is heavily nuanced and requires a good deal of contextualisation. According to recent government figures, 99.9% of the UK’s business population is made up of small and medium-sized enterprises. The vast majority of whom won’t have unlimited reserves of funds to simply write blank cheques for executive salaries.
Nor should they, and that’s exactly what we’re driving at. Your executive salaries should be in line with the market value of candidates in similar roles as well as your current turnover and ambitions for growth. This is where an executive headhunter can offer invaluable insights that enable you to develop realistic executive salary packages.
Understanding the value of top executive candidates
Executives set the vision and direction of the company, as well as driving organisational performance. With such lofty responsibilities, it’s crucial to invest carefully in executive search. There’s no denying that compensation packages for C-suite executives can be costly, but an executive salary should be considered an investment rather than a cost. Top candidates come with a wealth of invaluable experience, knowledge and contacts.
As such, executive roles are highly competitive and require a specialised set of skills. A successful executive is likely to have an impeccable and proven track record in their industry. They’ll bring a deep understanding of corporate strategy and have the ability to lead high-performing teams. Depending on their position, they may also be adept at managing complex legal and regulatory processes, as well as forging strong relationships with key stakeholders.
Executive leadership is about more than just providing day-to-day guidance. It involves taking a long view of the organisation’s goals and objectives. The best executives have the ability to anticipate challenges, recognise opportunities, and develop effective strategies for achieving success. This kind of vision delivers substantial added value in the event that your company ever needs to navigate difficult times or capitalise on new opportunities.
The real cost of losing top candidates
The competition for executive roles is fierce. Consequently, employers must be aware of the current market conditions to attract and retain the best candidates as part of their executive search activities. That means offering attractive compensation packages that not only include competitive executive salaries, but also other wider benefits like performance bonuses, flexible working arrangements, and generous pension contributions.
When it comes to hiring executives, there can be a costly price to pay if you’re not willing to meet competitive salaries. Not only will you struggle to attract candidates with the right experience and qualifications, but you may also risk losing existing staff, who could be tempted away by higher-paying positions. So you need to have realistic expectations when setting executive salaries, considering market conditions and the true value of top candidates.
The cost of not securing or retaining high-calibre executives goes well beyond financial considerations too. There are also potentially significant reputational consequences for failing to attract or retain the best talent in your industry. The loss of key executives can disrupt day-to-day operations and tarnish the company’s reputation. This could have a long-term impact on its ability to attract new business or secure mutually beneficial partnerships.
Furthermore, losing executive talent can mean the company struggles to capitalise on opportunities and protect its market position. Executive leadership is essential for driving innovation and staying one step ahead of competitors, and the loss of experienced personnel can lead to a significant competitive disadvantage.
There’s also the very real risk that top executives could join your competitors. If they’re not offered competitive salaries and benefits or are unhappy with their current role, they might jump ship. This can lead to a significant loss of intellectual property and corporate know-how, as well as disruption to your ongoing projects.
Balancing salary demands with company budgets
When setting executive salaries, you need to take into account the unique requirements of every executive role and ensure they’re in line with your organisation’s overall goals. Consider both your short- and long-term objectives when making decisions about executive compensation, as well as any lingering financial constraints. You may also want to consider alternative forms of compensation that can help to attract top talent without breaking the bank.
For example, performance-based bonuses and share options can be an effective way of incentivising executives to meet their goals, while flexible working arrangements and career development programmes can be attractive for those looking for a long-term career move. Or, you might want to consider the option of contractor or interim senior executives who can provide their expertise on a part-time basis, which may align better with your budget.
You should be prepared to showcase the unique aspects of your organisation which set it apart from your competitors. Highlighting the company culture, core values, and team dynamics can help to attract executives who are looking for an inspiring working environment. You may also want to think about spotlighting your corporate social responsibility activities, which can help to attract candidates who want to make a positive impact.
Given the stakes involved, it can certainly pay to partner with an experienced executive search firm, like Red Diamond Executive Headhunters, to ensure you can find the best candidates for your boardroom-level positions. Our expert headhunters can provide invaluable insights into the market and benchmark executive salaries for your industry. We drive your executive search activities, identifying talent and negotiating competitive offers for you.
Secure the best boardroom talent with Red Diamond
At Red Diamond Executive Headhunters, we understand the importance of offering attractive executive salaries in order to entice the best C-suite candidates and secure them for your organisation. With decades of experience in executive search, we know what it takes to secure the right talent for your business. We’ll work closely with you to ensure realistic salaries are offered that reflect both your prospective candidate’s value and your business goals.