The Advisors' Blog

With a tight labor market and executives & employees reconsidering the “nature of work” as we know it, compensation committees are now dealing with much more than “business as usual.” This memo from Tapestry networks recounts conversation themes from a recent meeting of over a dozen comp committee chairs. The directors are paying attention to how management understands and responds to changing employee expectations:

1. Companies are assessing workplace models for the post-pandemic future. Comp committees should encourage management to be transparent & maintain consistent messaging, and to focus on principles-based training for managers on the ground.

2. A tight labor market empowers employees to ask more of their employers. Companies need to gain insights into the needs & preferences of employees and implement narrowly tailored solutions, which may vary based on industry, regulatory & tax issues, and the specific employee base. The current emphasis on DEI initiatives is just one example of employees using their voice to shape corporate actions.

3. Greater expectations for DEI offer opportunities and raise questions. Board members should look beyond diversity training and coaching to more fundamental steps to improve performance. Have realistic expectations about the pace of progress.

4. Measuring DEI performance and linking it to compensation remains a challenge. One compensation chair said, “If you benchmark DEI against your industry, you’re not necessarily aiming high enough. Identify
New realities for the modern workplace the companies that are doing it right and hold them up as the standard.”

5. Directors want boards to drive DEI initiatives and results. Several members emphasized that directors must set DEI expectations, prioritize them at the board level, and demand results. To start, diversity in the C-suite helps set a tone of inclusion for the entire organization.

– Liz Dunshee