Executive compensation looms as an area warranting attention in the near-term.
A recent study jointly conducted by the Stanford Business Graduate School and Rock Center for Corporate Governance indicates that Fortune 250 directors see a diminishing talent pool for CEO replacements for their companies. They noted that it is not just job skills and knowledge that they are looking for, but the current business environment requires short-term financial results tightly coupled with strategic vision among other skill sets (communication, leadership, and culture). The surveyed directors feel they have only four qualified candidates, both inside and outside, to consider, when they used to have nine or ten.
We believe that this perspective, right or wrong, will demand better succession planning foresight, management development, mentorship, and grooming, and will place pressure on existing compensation programs. And while this study was limited to CEO’s at the Fortune 250, it certainly will have an effect on other public companies as well as private companies all across the executive level as the competition for the ideal candidates elevates.