A good friend of mine is the CEO of a small (but busy) corporation. She told me that the single biggest differentiator between good HR leadership and inadequate HR leadership is someone who can speak the language of executive compensation.

You see, executive compensation is different than “average joe” compensation.

You get paid money. If you’re lucky, you might get a bonus. Some of you get RSUs. Maybe some of you participate in the grants and options game.

Executive compensation, which is way above my paygrade, gets confusing and weird. Earnings are taxed, but rich folk don’t like to pay taxes. Ownership, vesting, stock and scheduling all come into play in this regard, too. Health care and retirement schemes get complicated because companies have to indemnify their organizations and insure their senior leadership teams and officers. Who gets a company-mandated physical and when? (It’s not just officers.) Then there’s the perquisites aka fringe benefits of the job. Want access to the company apartment? When do you get access to legal counsel? What about a helicopter? A driver? When is that driver on call? Who does your personal planning? What does your expense account look like?

The CHRO of the future needs to know this — and know the people who know this — and she needs to know what, when and how to report this stuff (or not). Compliance still matters.

Most of us will never see this world, but it exists.

I like Ann Bares and Paul Hebert when it comes to compensation-related stuff. I also like the internet, which answers all my tough questions in life. I do think you can gain some insight into how companies operate and govern themselves (or don’t) by volunteering on a not-for-profit board.

None of this is the same as earning legit “executive compensation” experience, which is earned in the trenches; however, in the absence of proximity to power, it’s good to learn how some of these things work. And you should learn them ASAP, or get to know someone who knows this stuff, if you want to get promoted.

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1 Comment

  1. if you’re an HR professional and have a deep understanding of comp, you will always be able to be employed. If not W2, certainly as a ‘come and help us with this compensation challenge’ hired gun. Thing I’ve seen, though, is that becoming smart in comp necessitates the equivalent of HR kryptonite – formulas and spreadsheets. I love Excel now, because I saw it as a way to differentiate myself from other HR pros and add value to my exec stakeholders. But, as you mention above, there are a lot of nuances and complications to executive compensation.
    You mention a couple of experts that you like to check in with when you’re scratching your head. Another resource people can consider is David Kirby – knows his stuff inside and out and is one of those people who genuinely loves to help other excel and lead.
    Great post Laurie!

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