What’s in store for executive compensation next year? One expert believes there will be “a clamping down on compensation” as the result of government scrutiny of company pay practices.
Michael Zinn, president of executive search firm Michael D. Zinn & Associates, says, “As regulators and Congress call for investigations into executive compensation, and question how companies that stand to be bailed out by the Federal government can pay bonuses to their executives in this year of severe economic downturn, aftershocks will ripple throughout the entire economy.”
As a result, most executives will be affected in 2009, Zinn says. He adds that in the current climate (with government oversight and a poor economy) salary offers for new hires will be impacted in most, if not all industries, making the jobs of recruiters and hiring managers much more difficult: “If a company institutes a cap, prospective new hires may not want to work there. More importantly, if a company attempts to get around a salary cap by only restricting current employee salaries and not the salaries of new hires, there will be an adverse affect on morale and the best employees will think about moving elsewhere.”
“We are currently at that point in the economic cycle when ambitious, aggressive, high-level managerial and executive employees are nervous,” Zinn notes. “They have well-founded fears about career stagnation and possible job loss because of weak industry economics or governmental caps. Historically, this does not bode well for retaining good people. At first, people will sit tight, but soon the best of these executives will be looking for change. They will want to move on to companies and organizations that will not cap their growth or into industries that are not under governmental scrutiny.”