Are your executives paid based on their performance?

One of the taboo topics in the American business realm is how much someone makes, but when you hire executives and senior managers to lead your staff, it's important to ensure you are cognizant of not only what they make, but whether or not their performance is living up to their salary. This is particularly true when investors, board members or any other important stakeholders get involved, because a high-priced, low-performing salary can have a significant impact on their returns.

An article in The Financial Post examined the difference between Canadian and American executive salaries. According to the article, while executive pay has soared to new heights in the United States, that has not happened in Canada. Theresa Tedesco, the article's author, says companies have collectively implemented changes to tie pay with performance, giving more bonuses and incentives and less in base salary. 

"Executive pay has undergone a bevy of changes in recent years to make it more shareholder friendly," Tedesco writes. "Over the last few years, companies have changed the metrics of executive pay to align them with performance, giving bonuses and more stock grants as a way of making the chief executive's pay packet more reflective of a company's performance."

As your company works to make changes that tie salary to performance, it's important to appease your shareholders and to make sure you are getting the most from your investment into new leaders at the organization. Doing your due diligence can make sure you bring in the right people. Working with an executive search firm will help find the talent you need.