Linking Executive Compensation to Reputation
It’s been said that there’s nothing like motivation to increase both collective and individual performance.
And through the lens of reputation management, that means tying the risk and reward of enhanced success to personal performance-based compensation of the executive C-Suite.
One of the companies leading the way in this endeavor is Proximus. As a telecom provider in Belgium, Proximus is reportedly the first to integrate reputation-based remuneration into long-term incentive plans for upper management.
Relative to major companies across the world, according to the most recent Reputation Leadership Study (RLS), that puts Proximus into an elite group of companies that have attained an advanced status of reputation management, through the full integration of reputation with long-term strategy across the enterprise. Based on the most recent findings in the RLS, fewer than one out of 10 companies are at an advanced state of reputation measurement and management strategy.
With the intent of holding the company accountable for its reputation, Stefaan De Clerck, The Chairman of the Board of Proximus, Belgium’s largest telecom company, announced a fundamental change to the bonus scheme for the company’s senior management in an interview in the business dailies De Tijd and L’Echo.
Reputation as a Key Performance Indicator
As of 2019, upper management’s long-term incentives will no longer be determined solely by financial metrics. They will now include key reputation-related performance indicators based on RepTrak® measurement among the General Public.
Proximus is Belgium’s first major company to integrate reputation criteria into its senior management’s leadership remuneration scheme. The telecom provider aims to take a lead in responding to increased expectations among the public that companies deliver tangibly on their social purpose. As companies seek to set non-financial KPIs for themselves, reputation has proven itself to be a holistic, measurable and actionable concept. Most alternatives focus fall short in their thoroughness, focusing on one specific area, such as CO2 reduction to show progress in sustainable operations.
In taking this step, Proximus follows the example of Dutch telecom provider KPN that pioneered the practice of integrating reputation-related KPIs in long-term incentive plans in 2011. Similarly, in Spain, telecom provider Telefonica is complementing its financial KPIs with include energy efficiency, diversity, and reputation.
Together with Reputation Institute and akkanto, Ri’s exclusive partner in Beligum, Proximus used RepTrak data to tailor a set of KPIs that have the most impact on reputation and relevance to company strategy. These KPIs will enable the telecom giant to embed reputation into culture, strategy and operations at the very top of the organization.
VP and Market Leader, Benelux