Issue Management Paper On Executive Compensation Pay

2862 words - 12 pages

ISSUES MANAGEMENT PROJECTExecutive Compensation Pay IssueTable of Content


Page No





Role of Human Resource Consultant



The Issue



Role of Government



Strategies that can be employed to implement fair reporting practice.






References and Citation


AbstractI feel that, today, the Human Resource Management has become even more important facet of an organization than ever before. Business units that have become global players today have a daunting task to manage their work force. Mergers and Acquisition have become an integral part of a well-diversified and growing company and the m ...view middle of the document...

How and what led to a staggering rise in the CEO's compensation, and how are the pay consultants with "conflict of interest" related to a drastic increase in the CEOs compensation? What measures are taken by government to prevent such events in future and how does this affect the investor, shareholders, stakeholders and an average employee? I will attempt to bring attention to these issues, observe problems and propose solutions.The Role of Human Resource ConsultantOne of the most significant decisions in life is the choice of a career. A shrewd decision made, based on the factors ranging from inspiration, latent interests, and inherent skills to scope and satisfaction. My choice of career has emanated from careful analysis and planning. I am presently pursuing MBA with inherent inclination to join an outsourcing Human Resource Management Consultancy. Since Human Resource is a field that requires profound attention on ethical issues and interest of various stakeholder's, I choose to analyze the role of Human Resource consultant in today's fast paced, multi tasking corporate culture.The ethical issue pertaining to excessive compensation of the CEO's was revealed recently during the recent U.S economic break-down where banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits in the calendar year 20072.Most companies prefer to outsource a major component of their Human Resource. The reason for this being that companies like IBM, whose core competency is Information Technology do not want to spend their efforts in analyzing the benefits and compensation of their employees or they may not have adequate means or expertise to measure the perks, incentives and salaries of their employees. Hence they hire an external HR consultant who plays a crucial role in informing the company not only about the market conditions and the regulatory requirements related to compensation, but also about different ways in which the compensation plans can be designed to attract and retain talent, as well as to promote shareholder value creation3.However, in the past decade companies, mainly Fortune 250, have hired executive compensation consultants to implement a pay system for the CEOs of the company. In a company, a compensation committee and Human Resource department is responsible for hiring a consultant to devise a pay for the CEO or tailor actuarial services like health plan, retirement plan or insurance plans for employees. The consultant hired, offers expertise service pertaining to "various legal and tax-related aspects of executive compensation practices"4. However an HR consultant's job is not limited to offering executive compensation advice. Some of the other diverse function of an HR consultant involves designing pay practices appropriate for organizational changes such as Mergers and Acquisitions, spinoffs, and restructurings. Consultants also maintain extensive knowledge about rec...

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