June 7, 2021
Another Rendition to Expand Scope of Compensation Committees
Last summer, Liz blogged about suggestions to broaden the role of the compensation committee to focus on the company’s workforce as a whole. For a recent rendition of this concept, this Harvard Business Review article says there’s an opportunity to move to a model of having a “people committee.” The article notes that some companies, including JPMorgan Chase, Walmart, and Dupont, have expanded the mandate of the traditional compensation committee and moved toward a hybrid structure with something along the lines of a “compensation & management development committee.” But, the authors contend that for companies to cultivate a competitive advantage, a “people committee” can help them deliver a sustained advantage.
Your people committee is on the hook to ensure management delivers today’s employee strategy and tomorrow’s leadership bench. Think of it as an umbrella committee that helps you create an advantage by setting priorities, tracking progress, and driving accountability in the talent domain.
As a critical talent attraction and retention tool, compensation should remain a core responsibility of the new committee, ensuring SEC compliance and aligning leadership performance and potential with rewards and long-term incentives. But the people committee would reach beyond compensation in a number of areas to add differentiated value in three areas (the article provides additional commentary on each of these areas):
– CEO succession
– Driving cultural accountability
– Shaping the workforce of the future
– Lynn Jokela