Merit Budget & Employee Retention Survey FY22 merit budgets

Following an extensive internal diagnostic, companies can focus on key HCM areas including, but not limited to, performance management; succession planning; diversity, equity, and inclusion (DE&I); and culture.

Organizations that lead in DE&I devote meaningful energy from a strategic perspective by aligning DE&I with business strategy, dedicating sufficient resources, and emphasizing accountability.

ESG metric prevalence in incentives continues to increase among S&P 500 companies but at a slower rate than prior years, as market focus shifts to refining existing ESG metric types and structures rather than increasing adoption.

While we don't anticipate immediate clarity on these questions, we see this as an opportunity for companies to reflect on their DE&I policies, practices, and metrics to ensure they align with business and communication strategies.

Directors with human capital expertise can be invaluable at a time when the “war for talent” is raging.

The absence or misalignment of well-executed DE&I initiatives can introduce unintended challenges, potentially derailing the achievement of objectives.

In certain cases, many enduring principles of executive compensation should be applied to ESG metrics, including considering the alignment to company strategy and values and the incentive value that a broader view of performance can provide.

It’s only natural for boards to worry about retention in CEO transitions, whether hiring from inside or outside. When making retention award decisions, boards should consider the following.