Report Validates CEO and C-Suite Pay Disparities Grow with Company Size

There are many executive hiring trends reshaping 2024 and a new report from ON Partners provides boards and senior leadership teams with C-suite compensation projections, as well as recruitment trends as we move into the new year. Leveraging transparency and data, ON Partners anticipates four shifting leadership trends that will resonate in tomorrow's boardrooms. Let’s take a closer look!

December 19, 2023 – In anticipation of the new year, a new report from ON Partners delves into major shifts impacting the business world, including average compensation rates by company size, geo-market hiring demand, and industry sectors experiencing the greatest shifts in talent management strategies. “This year’s report leverages transparency and data innovation, specifically as it relates to overall compensation for the executive marketplace,” said Tim Conti, co-president of ON Partners. “Through our research, we were able to confirm trends in CEO and C-suite compensation and a rise in executive recruitment in Middle America.”

“As companies have navigated a complex terrain this year, evaluating strategic decisions amidst market fluctuations and geopolitical challenges, the majority of executive hiring momentum is occurring in Middle America,” said Mr. Conti. “Executive recruitment has notably increased by over 58 percent in the Midwest region over the past two years, which has surpassed the figures from the preceding two-year period. This notable shift is particularly pronounced in Illinois and Ohio.”

Leveraging transparency and data, ON Partners anticipates four shifting leadership trends that will resonate in tomorrow’s boardrooms.

1. Middle America Ignites: A Renaissance In The Heartland.

Market indicators observe shift in middle America. The recent Business Insider article highlights the burgeoning trend of tech and innovation companies thriving in Middle America. “This shift signifies a departure from the traditional tech hubs in California and New York,” the ON Partners report said. “The growth can be attributed to several factors, including favorable economic conditions, business-friendly policies, and a skilled workforce.”

ON data points to elevated executive hiring and compensation in Midwest and Southern regions. Executive recruitment has notably surged by 58 percent in the Midwest region over the past two years, according to ON Partners’ search data, surpassing the figures from the preceding two-year period. This notable shift is particularly pronounced in Illinois and Ohio. Texas has spearheaded a 10 percent uptick in executive leadership placements during the same period, while Georgia and North Carolina collectively witnessed a substantial 33 percent increase in executive hiring.

2. Payday Revolution: Unveiling Compensation Disparities

Compensation benchmarks for C-suite executives in growing organizations In executive hiring, the top question is often about compensation expectations. ON data for 2023 discloses average compensation ranges for C-suite leaders, depending on the organization’s current size. The CEO role rises in compensation at a higher percent rate than any other C-level position.

Related: What Talent Acquisition Trends Will Dominate 2024?

Historically, in the late 20th century, due to a heightened emphasis on maximizing shareholder value, a change was made to how CEOs were compensated, according to the ON Partners report. “The association of executive pay in combination with stock performance further enticed CEOs to increase share prices, resulting in substantial paychecks when they were able to succeed,” the firm said. “While other phenomena have proven to contribute to the salary of CEOs, factors such as company performance, industry norms, the scope as well as complexity of the role, and peer comparison each play an active part in the final decision for a CEO’s salary.”

3. Calculated Moves in Human Capital Reshape PE Dynamics.

A new talent strategy is needed for private equity. Harvard Business Review highlighted the evolving challenges facing private equity firms, emphasizing the increasing importance of effective leadership. “Historically, PE firms focused on financial engineering, often neglecting the development of leadership capabilities,” the ON Partners report said. “Several factors, including a decline in attractive acquisition targets, rising interest rates, and longer investment hold times, have led to a shift in talent expectations and management. Thus, the operational value creation has become more crucial than financial engineering, and PE executives recognize the significance of leadership effectiveness. A qualitative shift in the qualities sought in executives, with a growing emphasis on managing, motivating, inspiring, authenticity, credibility, emotional intelligence, and people skills.”

Strategic Talent Acquisition Planning in 2024
In the competitive landscape of talent acquisition and executive-level hiring, having a well-curated strategic plan is crucial. With the year coming to a close, a new report from McDermott + Bull’s Jason Levi Pinegar explains that it becomes pivotal to map out an executive hiring and human capital strategy for 2024 to ensure sustained success, talent retention, and future growth. The report looks into key areas to streamline your executive recruiting and leadership strategies for the upcoming year.

“Looking back over the last several years, the talent landscape has witnessed unprecedented candidate mobility and significant recalibrations,” the McDermott + Bull report said. “As a significant number of boomers approach retirement, organizations face the challenge of replacing them. The market, increasingly filled with less experienced candidates, will make recruitment progressively more demanding.”

YoY ON data shows an increase in PE-backed searches by +70 percent in the last two years, but also an elongated time of executive search completion. Identifying and ranking qualitative skillsets and experience for PE candidates is time-consuming, often creating a longer search process for talent. In response to the evolving landscape of PE talent, ON is set to launch a new AI-enabled candidate sourcing and assessment product in early 2024. “This innovative solution is informed by millions of data points within our network, facilitating candidate identification based on pertinent skills, experiences, and relevant events,” the firm said.

4. Power Surge: New Talent Landscape in Energy and Cleantech.

Growth and investment drives shift in sector talent pool. As the industry continues to evolve, the talent strategies in the energy and cleantech sectors have changed according to the latest U.S. Energy Report.

The changing landscape of human capital talent strategies in the sector can be attributed to several factors including growing industry complexity, demand for specialized skills, innovation and technological advancements, increasing emphasis on sustainability, and the ongoing transition from traditional energy sources to renewable and clean energy, according to the ON report. “Every technology category in the energy sector, according to the report, saw employment growth in 2022,” the firm said. “And with significant federal investments across several categories of the sector, the talent pool will continue to expand and shift, thus driving new expectations for executive leaders in the space.”

ON data indicates increase in executive talent demand in energy and cleantech related sectors When comparing the timing of federal investments and talent expansion within the energy and cleantech sectors, ON data illustrates a parallel uptrend in the demand for executive talent.

Related: How CHROs Can Steer the Ship to Success in 2024

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor; Lily Fauver, Senior Editor – Hunt Scanlon Media

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