What We’re Thinking About July 2026

Three topics stood out in our most recent internal discussion: the broadening perspective on peer groups and talent markets, growing prevalence of targeted retention awards, and the current effect of AI on pay design and human capital economics. We continue exploring and welcome dialogue about these and other topics we’re tracking.

1. Peer Groups and Benchmarking

Secondary peer groups—”Supplemental peers,” “Reference peers,” etc.—are more prevalent now because they can contextualize programs and practices in the broader talent market. For example, the pay programs, performance leverage, and equity usage at industry-dominant companies are important information, even if the value of CEO pay is not a valid comparison.

Questions for the board:

1. Does the primary peer group sufficiently reflect sources and destinations of executive talent?
2. Is information from a broader group useful?

2. Targeted Retention Strategies

Hot talent markets mean your best people have even more compelling alternatives. Key elements of using pay to support retention:

1. Identify Ruthlessly: Know the players—revenue/innovation drivers and those who enable it—and set the bar high.
2. Build Comprehensively: Retention awards only work with leadership development opportunities, internal prominence, board-level exposure, and compelling responsibilities.
3. Track Actively: Report metrics regularly as part of compensation and succession discussions.

See our related research when considering retention awards: Do Responsible Special Awards Have to Be an Oxymoron?

Questions for the board:

1. Do we know who our most critical people are?
2. Do we know why?
3. Do our performance management and rewards programs help follow them over time?

3. AI and Organizational Change

Lots of headlines about AI-talent costs—but what’s the true landscape? Will AI create jobs, destroy jobs, or just change them? While some AI-native companies have EBITDA-per-employee ratios well beyond historical norms, measurements of efficiency gains remain broadly elusive. Identifying talent and pay strategies versus reacting to a vague market threat of “AI talent” is critical. Related reading: The CPO’s Guide to AI Compensation Discipline

Questions for the board:

1. Has our talent strategy changed? Should it?
2. Should potential changes in productivity change our pay strategy? 
3. Could bold financial incentives encourage and drive changes in productivity?