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Managing Executive Performance for Organisational Results: Research Report Meeting in collaboration with Hay Group
14 August 2008

London

PARC has addressed issues in executive incentive pay on a number of occasions in recent years.

A research report in 2006 on the role and functioning of Board Remuneration Committees was followed later that year by a session at which Vicky Wright led a discussion on ‘what works in executive incentives’, exploring some of the assumptions and controversies around that subject.

In January 2007, Ed Carr of The Economist presented that journal's research report which examined current practices in executive incentives in the USA and the UK.

This year, Professor Sir Andrew Likierman of the London Business School will complete a PARC research study on evaluating the appropriateness and effectiveness of different types of business performance measures (internal and external, financial and non-financial) and how targets are set.

These activities raise questions about key linkages between executive performance and reward:

  • are executive incentives based on a firm process for defining executive performance and producing objective evidence of delivery?
  • in what ways are goals for executives linked to organisational strategies and on what timeframes?

2008 Research Project:

To investigate these issues further, the PARC research project explores how the performance of executives is managed, and how the links to reward really operate.

For the purpose of this research, executives comprised the same population as that covered by Remco arrangements – the CEO, Executive Directors and their direct reports, who might include members of subsidiary Boards.

To investigate these issues further, the PARC research project has explored how the performance of executives is managed, and how the links to reward really operate.

Among the issues examined by this study are:

  1. Is there a defined performance management process for executives?
  2. Who is responsible for the performance management of the executive population?
  3. How is executive performance defined and assessed?
  4. How is executive performance linked to organisational performance?
  5. How is performance assessment fed into executive reward?
  6. Who supports executives in improving their performance?

Key Outputs:

We have ensured that members benefit from this research by having access to academic thinking, a summary of current practice and our identification of what the most successful organisations are doing in this field.

The outputs therefore comprise:

  • a literature review, to pick up broad themes in executive performance management, along with examples of thoughtful or innovative practice
  • a summary of practice among PARC members
  • a summary of findings from interviews conducted with expert consultants and academics from relevant fields
  • case studies to bring the research questions to life in specific organisational contexts.

Research team and timing:

The research was led by David Lincoln with support from Peter Christie, who led the input from Hay Group. Wendy Hirsh who works with IES was the lead academic on field research and case study development.

The research commenced in late-2007 and the report produced for the member meeting held on 13th November 2008.

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