Executive Roles with a Digital Focus Show Signs of Expanding

Executive Roles with a Digital Focus Show Signs of Expanding

Companies are responding to an increasingly digital market environment by adding executive roles with a digital focus or changing traditional roles to have a digital orientation, but are also finding that a digital company does not necessarily have to be led by technologists, the results of a global survey of managers and executives conducted by MIT Sloan Management Review and Deloitte indicated.

The survey, conducted in the fall of 2015, captured insights from more than 3,700 business executives, managers, and analysts from organizations of various sizes in 131 countries and 27 industries. The findings revealed that the list of “digital” business roles and functions is extensive and growing: for example, there are now digital strategists, chief digital officers, digital engagement managers, digital finance managers, digital marketing managers, and digital supply chain managers.

Researchers noted, however, that despite the proliferation of digital roles and responsibilities, most of the executives surveyed recognize that their company is not adequately preparing for the industry disruptions they expect to emerge from digital trends, and report feeling constrained in preparing for a digital future by a lack of resources, a lack of talent, and the pull of other priorities. Nearly 90% of the survey respondents said they anticipate that their industry will be disrupted by digital trends to a great or moderate extent, but only 44% said their organization is adequately preparing for the disruptions to come.

The survey also found, however, that a group of “digitally maturing” companies are transcending these constraints, achieving digital capabilities that cut across the enterprise. Based on how the respondents rated their company’s progress in adapting to digital technologies, their organization was classified as early, developing, or maturing. Close to 90% of the executives surveyed at digitally maturing organizations reported that they are integrating their digital strategy into the company’s overall strategy.

In addition, the survey showed that more than 75% of respondents at digitally maturing organizations provide their employees with resources and opportunities to develop their digital acumen, compared to only 14% of respondents at early-stage companies.

Yet researchers observed that some companies are experimenting with new approaches to performance management: for example, rewards can be allocated based on real performance data or survey data from all of an employee’s project leaders, or employees can determine rewards for one another in a crowdsourced approach.

From Benefit Trends Newsletter, Volume 59, Issue 9

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.

Tech Executives Express Optimism about Revenue and Employment Growth

Tech Executives Express Optimism about Revenue and Employment Growth

While technology executives report that they are ramping up deployment of automation and machine learning across several functions of their company, they also claim they are planning to hire more people over the next several years, according to the results of a survey of U.S. technology CEOs by accountancy firm KPMG.

Released on July 11, the findings of a survey of 138 U.S. technology industry chief executives from internet, hardware, software, cloud, and IT services companies showed that around three-quarters of the respondents believe that automation and machine learning are likely to replace at least 5% of their manufacturing, technology, sales, and marketing workforce over the next three years. At the same time, more than half (55%) of respondents said they expect their company’s headcount to grow at least 6%.

Almost 60% of the CEOs surveyed said they expect annual revenue growth for their organization over the next three years of between 2% and 5%, while 17% said they anticipate growth of between 5% and 10%. The findings also indicated that 97% of the CEOs surveyed are confident about U.S. revenue growth prospects over the next three years, and that nearly 90% are confident about global growth as well.

When asked about their strategic priorities in the coming 36 months, the top response of the CEOs surveyed was digitization of their business, followed by a stronger client focus, implementing disruptive technology, minimizing cyber security risk, and talent development.

The survey also found that almost half of the respondents describe their approach to innovation as accelerated. When asked how they plan to accelerate the execution of their strategies, 80% of the CEOs surveyed said they are using disruptive technologies to improve products and services, 60% said they are hiring new talent, and 49% said they are forming new partnerships and alliances. The findings further indicated that around 80% of the executives polled see growth through partnerships or collaboration with other companies as the way to drive shareholder value for the next three years.

In addition, the results revealed that the leading concerns of the tech CEOs surveyed are product relevancy three years from now, the impact of global economic forces on their business, and how millennials and their differing wants/needs will change their business. When asked about risk, the CEOs polled said they are most concerned about cyber security, regulatory risk, and reputational risk. However, 90% of the respondents agreed that the need for security is generating innovation in products and services.

From Benefit Trends Newsletter, Volume 59, Issue 8

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.

Financial Executives Report Slightly Lower Pay Increases In 2016

Financial Executives Report Slightly Lower Pay Increases In 2016

Pay raises for financial executives at both public and private companies in the U.S. are set to rise at a healthy rate of 4% in 2016, but are down slightly from the previous year, according to the results of a survey conducted by Grant Thornton LLP and the Financial Executives Research Foundation (FERF).Â

The survey of 363 active Financial Executive International (FEI) members from October 2015 through January 2016 found that the average salary increase for senior-level financial executives at both public and private companies is expected to decline slightly in 2016 compared to the previous year. For 2016, respondents at public companies reported an average salary increase of 3.7%, down from 3.9% a year ago; while respondents at private companies reported a 4.1% increase, compared to 4.4% in 2015.

Researchers noted that these numbers are consistent with broader market data, and are higher than the projected across-the-board average pay increases of 3.1%. However, of the financial executives surveyed, 26.5% said they received no salary increase for 2016, up slightly from 24.2% in 2015.

The findings for 2016 indicated that among public companies the average base salary of a chief financial officer is $303,975, and the average base salary of a corporate controller is $229,895; while among private companies the average base salary of a CFO is $217,509, and the average base salary of a corporate controller is $161,374.

Of the respondents at companies that offer a sign-on bonus, the most common offering reported is a cash bonus (46%), followed by stock options or restricted stock (28%), and a combination of cash and restricted stock or options (26%). The results also showed that more than half (60%) of the respondents have a target bonus opportunity in 2016, and that the median level on bonus percentages for the top finance position at private companies is slightly higher than at public companies.

The financial executives surveyed were also asked about the long-term incentives they are offered. Most (89%) of the public company respondents said they receive some form of stock-based incentive compensation, while just 35% of the private company respondents reported receiving some type of stock-based incentive compensation. By contrast, less than one-quarter (22%) of respondents reported that they are eligible to receive long-term cash incentives.

 

Among the executives surveyed who are eligible for long-term incentives and whose awards have a performance or market condition for vesting, the most common measures for determining payouts cited are company strategic goals/objectives (19%), followed by more specific company financial performance measures like EBITDA (15%).

Nearly all (95%) of the respondents said they have access to a defined contribution plan, while 23% said they have access to a defined benefit plan. However, nearly half (47%) of respondents at companies that provide a defined benefit plan said the plan restricts new entrants or has frozen benefit accruals.

When asked who at their company is responsible for making pay decisions, 45% of respondents said the CEO/management makes all compensation decisions, while 44% reported that their company’s board of directors makes the pay decisions for senior executives.

Benefits Trends, Volume 59, Issue 7

The information contained in this post is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. The information in this post is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.

Workplace Giving Programs Can Help Attract and Retain Talent

Workplace Giving Programs Can Help Attract and Retain Talent

Research shows that effective corporate giving programs are beneficial for a range of stakeholders, including the company, employee donors, and the benefitting charities, according to a recently published analysis by corporate philanthropy software provider JK Group.

In an article entitled, “The Future of Employee Benefits: Employee Giving Programs,” JK Group director of client strategy Nita Kirby cited research showing that the presence of corporate philanthropy programs has the potential to increase revenue by up to 20%, reduce staff turnover by up to 50%, and can even have an effect on the overall mood and health of employees.

Kirby also reported that the results of a survey conducted by JK Group showed that employers recognize the benefits of strong employee giving programs, with over 80% of the participating companies and organizations agreeing or strongly agreeing that their company is committed to a giving program. The survey findings further suggested that employee giving affects a company’s ability to attract and retain talent.

In addition, Kirby cited a 2015 report that showed that 61% of millennials would rather work for a company that offers volunteering opportunities or a giving program, such as volunteer time off, skill-based and pro bono volunteerism, and matching gifts.

Kirby also outlined several steps companies interested in incorporating giving and volunteering into their employee benefit programs can take. For example, employers can find out what type of programs solicit the strongest interest from their employees using free survey tools available online, and can then use the results of the survey to identify an employee advocate to support the program, and to help introduce the program to the rest of the workforce.

In addition, she advised companies to team up with partners associated with providing software and services that offer a user-friendly environment that allows employers to speak to their employees in their own unique way. To improve the chances that the programs will be supported and recognized by the entire company, she suggested that employers consider getting marketing, communications, compliance, and IT involved in supporting and promoting the philanthropy programs.

Finally, Kirby recommended that when it comes time to finally implement corporate giving programs, employers should look at a number of issues, such as whether they are adequately informed about all of the charities that might be in line with the philanthropic interests of their employees, and how legitimate the charities that are being considered for the company’s corporate giving programs are. To ensure that employees have peace of mind that their donations are ending up in the right hands and that their financial security has not been breached, Kirby advised employers to investigate the safest way to facilitate employee giving.

From Benefit Trends Newsletter, Volume 59, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.

Global Employment Levels Show Signs of Slowing

Global Employment Levels Show Signs of Slowing

More than half of companies worldwide are either cutting or freezing employment amid declining confidence in business conditions, but firms in the U.S. are more confident than companies in most other countries, according to the results of a quarterly survey conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA).

The “Global Economic Conditions Survey” for the first quarter of 2016 was conducted February 26-March 15, and included more than 1,200 responses from ACCA and IMA members around the world. Nearly half the respondents are from small and medium enterprises, with the rest working for large firms of more than 250 employees.

The results showed that in Q1 businesses were less optimistic about their prospects than at any other time in the past four years: almost half of the firms surveyed said that they are more pessimistic about their prospects than they were three months earlier, and less than one-quarter of respondents said they have become more optimistic.

The survey also found that more than half of firms are either cutting or freezing employment, while only 14% are increasing investment in staff. The findings further indicated that 42% of firms are cutting back on investment, up from 40% in Q4 2015. According to researchers, almost every region saw an increase in the number of businesses cutting capital expenditure last quarter, with North America being the most notable exception.

In addition, the share of firms that reported a drop in income rose to 48% in Q1, up from 46% in the final quarter of 2015. Researchers pointed out that declining income is now clearly the biggest problem facing businesses, followed by increased costs, the negative impact of foreign exchange movements, and problems securing prompt payment. Similarly, only 12% of respondents said they saw an opportunity to increase their orders as a result of changes in the global economy last quarter, while 49% said they saw an opportunity to cut costs.

The survey found that while companies in emerging market economies remain very gloomy about their prospects, business confidence across non-OECD economies did pick up slightly in Q1, led by Central and Eastern Europe, and by Russia in particular. However, the results also showed that business confidence in China in Q1 fell to its lowest level since Q4 2011.

The findings further indicated that business confidence in the OECD economies declined sharply in Q1, largely due to concerns over the UK exiting the EU: confidence in the UK was at its lowest level since Q2 2012, dragging down the average for Western Europe. By contrast, business confidence in North America improved in Q1, having hit a record low in Q4 2015. Although 36% of North American respondents said that they have become less optimistic over the preceding three months, researchers pointed out that this was an improvement from 44% in Q4 2015, and well below the global average of 48%.

The report cited a number of reasons for the loss of business confidence in Q1, including a sharp decline in revenues for commodities firms since mid-2014; increased pressure to pay higher wages; and a strong dollar, which makes imports more expensive in many countries and raises the value of dollar-denominated debts.

While researchers observed that the business confidence index level for Q1 2016 suggests that prospects for the global economy are far from bright, they pointed out that the level was lower in Q4 2011, and the global economy did not fall into recession. They also noted that less than one-quarter of all respondents in Q1 said they are worried about customers going out of business, and only 8% said they are worried about suppliers going out of business.

From Benefit Trends Newsletter, Volume 59, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.

Companies Are Increasingly Responsive to Shareholders

Companies Are Increasingly Responsive to Shareholders

Large U.S. companies are becoming more transparent about their compensation practices in response to shareholder activism, but continue to struggle to meet demands that they improve their corporate governance practices and increase gender diversity at the board and C-suite levels, according to a report recently released by international law firm Shearman & Sterling.

The findings of the report are based on a review of the annual proxy statements and other documents relating to corporate governance and compensation practices of 100 U.S. public companies available as of June 1, 2015. These companies, which were selected based on a combination of their annual revenues and market capitalizations, are referred to in the report as the “top 100 companies.”

Researchers observed that shareholder activism continued in 2015, with well-funded activist hedge funds setting their sights on bigger targets to generate the outsized returns they and their investors expect. The analysis showed that eight of the top 100 companies were subject to an activist campaign in 2015, up from six in 2014.

The report’s authors also predicted that proxy access will remain at the forefront of corporate governance debates in 2016 and beyond: the findings indicated there was a dramatic increase in the number of U.S. public companies that received shareholder proxy access proposals in the 2015 proxy season, from 20 in 2014 to 112 in 2015.

In addition, the analysis showed that shareholders are increasingly calling for a separation of the offices of CEO and chair of the board, as the demand for an independent chair of the board was the most frequently submitted governance-related shareholder proposal at the top 100 companies in 2015. However, the review indicated that at 63 of the top 100 companies the CEO was also serving as the chair of the board in 2015.

The report also noted that in response to increased demands for say-on-pay and other forms of shareholder activism companies are incorporating increasingly large and graphically complex compensation disclosures into their proxies. For example, the analysis showed that 74 companies produced an upfront proxy summary that included key points of the compensation disclosure in 2015,
up from 59 in 2014.

The findings further indicated that achieving gender equality on boards and in the C-suite is still a long way off: in 2015, women held 22% of the total number of board seats at the top 100 companies, and only two of these companies had a board in which women held 40% or more of the seats. Moreover, women were serving as the chief executive officer at only 11 of the top 100 companies, and as both the CEO and the chair of the board at just seven of the companies.

From Benefit Trends Newsletter, Volume 59, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.