‘Executive remuneration compass’ research project launched
– supported by the Goldschmeding Foundation
Society increasingly expects companies to adopt socially responsible business practices and create long-term value. The executive remuneration system used by large companies is still insufficiently geared to this and is still mainly aimed at boosting companies’ financial results. We have been dedicating ourselves to promoting socially responsible executive remuneration for several years now. In partnership with the Goldschmeding Foundation we are now taking the next step in our mission to establish remuneration policies that serve as a catalyst for social change, by launching the ‘Executive Remuneration Compass’ research project.
“The Humane Economy programme is aimed at embedding the interests of others in our economic actions. We believe that in the interest of social corporate responsibility, it is important that organisations also have the tools that are needed to integrate this in their remuneration structures.” – Suzanne Ekel, programme manager Humane Economy
Responsible leadership behaviour
Running a company requires that the interests of ALL stakeholders are considered and that directors focus not ‘only on the shareholders’ but on ‘all stakeholders’. More and more companies have defined a purpose for themselves that explicitly acknowledges social values. The long-term perspective and the role of companies in society are essential, but in order to arrive at a new equilibrium, a reform of remuneration policies is crucial. A new policy that supports broad social value creation and accelerates the move towards a new economy that not only focuses on prosperity but also on well-being. The growing social indignation about current remuneration policies proves that the desire for change is widely felt. However, developing a reformed remuneration policy is far from straightforward. What steps do organisations need to take? And how does executive remuneration contribute to the sustainable development of companies and society?
This research project is aimed at lowering the obstacles on the road to a new remuneration model, by properly aligning the extrinsic remuneration incentives with the intrinsic motivation for sustainable and responsible leadership.
‘Executive remuneration compass’ project
In the next two years, several scientific projects focusing on new types of remuneration policies will be undertaken. These will include:
1) online experiments aimed at analysing behavioural changes
2) classroom experiments aimed at enriching educational curricula
3) in-company experiments in order to gain immediate practical experience
Through these experiments we will demonstrate how changes to existing remuneration models will facilitate responsible leadership behaviour and produce better social outcomes. This will provide a basis for the new remuneration model and will at the same time demonstrate the impact that this model is likely to have in practice – for various leadership profiles. This will give us concrete and implementable answers to the question of ‘how’ remuneration contributes to sustainable social outcomes.
Frederic Barge, founder, director and chairman of the board of Reward Value Foundation: “We are very proud of and grateful for the support of Goldschmeding Foundation, which enables us to collect evidence of the effectiveness of a new remuneration model that aims to empower executives to lead companies with a view to creating long-term social value.”
Partnership
Reward Value is continuing its partnership with SEO Amsterdam Economics (SEO) by carrying out the aforementioned experiments. In addition we aim to carry out our field work in partnership with business schools and large (international) companies.
