The effect of geography on executive compensation management

by on June 30, 2009 · 0 Comment POSTED IN: HR Info Center

Size has a greater impact in executive compensation management

Geography has a minor impact on executive compensation management. Generally speaking, as you’re looking at compensation management benchmarking, you want to match the data that you’re comparing to the job in question on three factors.

One will be size of organization that would tend to have a very direct correlation to compensation management. It can often be deep driving factor.

The second would be industry. Some organizations view industry as a critical component in matching their executive compensation management to the market. Others say that it’s of secondary importance. The rationale for that on both sides, some would say hey, it’s critical that our CEO know the automobile industry for example, if that’s where we are, how can we expect our leader to not have industry experience and knowledge?

The other side of that equation says, “You know what, we’re looking for the best leader that we can find, the best CEO. We’re looking for the visionary.” They can learn our industry. So industry can be a secondary importance.

Geography is typically not a critical consideration when you’re looking at executive compensation. However, if you’re looking at a particularly high cost area, you know, in New York City and many areas of California, and you’re looking to recruit somebody away from a lower cost areas, say in the Midwest, oftentimes, geography will be a component as you look at that individual.

So it tends on to have a strong impact job by job. But when you get down to the discrete level of looking at specific individuals, it can have an impact.

Edited remarks from the Rapid Learning Institute webinar: “Executive Compensation Trends: New Benchmarks & Changing Regulations” by Edward Rataj and Kevin Nussbaum

Leave a Reply


Request a Free Demo

We'd love to show you how this industry-leading training system can help you develop your team. Please fill out this quick form or give us a call at 877-792-2172 to schedule your one-on-one demo with a Rapid Learning Specialist.