Is your remuneration system aligned with your business strategy?
New economic environment
In light of the current economic downturn, managers’ and directors’ remuneration systems are a point of focus as they were established at a time of economic prosperity very different from the situation we are currently facing.
Because of the change in the economic cycle, we have salary packages linked to variable objectives which are impossible to meet in the current downturn.
Remuneration systems are not usually aligned with the companies’ business strategies. In fact, public opinion has pointed to their failure to adapt and lack of transparency as one of the main problems to be corrected during the present downturn
Challenges currently facing companies:
The challenge currently facing companies consists of redefining remuneration systems on the basis of their business strategy such that the following objectives are met:
- Cost cuts: The tax optimisation of remuneration enables overall costs to be cut.
- Retention: There is a pressing need to retain talent today in order to have the best management team tomorrow and avoid the unnecessary loss of valuable resources.
- Transparency and Corporate Governance: In order to guarantee good corporate governance both internally and externally, it is necessary to drive te transparency of the remuneration systems to ensure fairness on an internal level and their understanding by shareholders.
- Loyalty of managers and / or directors: Once the remuneration of the management team has been optimised, the current tendency is to offer them on-going advice on their private incomes. With the legal-lax advice of quality personnel, they will be able to continue to devote themselves fully to their business tasks with the certainty that both their earned compensation and income from daily operations are tax efficient.
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