By Hugh Courtney
In the course of a altering economic system, so much executives proceed to exploit a method toolkit designed for yesterday's extra good market. consequently, techniques emerge that neither deal with the dangers nor reap the benefits of the possibilities that come up in hugely doubtful instances. Now, McKinsey & corporation advisor Hugh Courtney argues that managers needs to stream past the outmoded "all-or-nothing" view of approach during which destiny occasions are both definite or doubtful. in its place, he indicates a simple-yet powerful-alternative: comprehend the extent of uncertainty you're dealing with in a given scenario, and you may make greater, extra educated strategic choices.Based on a global assessment of the most important technique difficulties confronted through over 100 prime businesses, Courtney finds how executives can increase 20/20 foresight - a view of the longer term that separates what might be identified from what cannot. whereas executives with 20/20 foresight can not often boost ideal forecasts of the long run, says Courtney, they could isolate the "residual uncertainty" they face and use this perception to create aggressive virtue in ultra-modern turbulent markets. Unveiling a progressive framework for diagnosing to which of the 4 degrees of residual uncertainty a selected process selection corresponds, "20/20 Foresight" indicates how readers can leverage this information to reply to 3 key strategic questions: form or adapt to uncertainty? Make strategic commitments now or later? and keep on with a centred or diverse strategy?"20/20 Foresight" additionally exhibits strategists find out how to tailor each point of the decision-making procedure - from formula to implementation - to the extent of uncertainty confronted, describes the strategic-planning procedures readers can use to observe, replace, and revise options as worthy in unstable markets, and features a toolkit for deciding upon, constructing, and trying out new process recommendations - whole with guidance for employing the appropriate software to the proper state of affairs on the correct time. A finished method of approach improvement lower than all attainable degrees of uncertainty and throughout all types of industries, this is often the fundamental consultant for making difficult strategic offerings in a altering international. Hugh Courtney is an affiliate critical with the worldwide procedure perform at McKinsey & corporation in Washington D.C.
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After the peer group is ﬁnalized, the next step is to collect and collate executive compensation data, either from private databases or culled from publicly ﬁled documents, such as proxy statements and Form 10-Ks. Of course, each data point must be reviewed to ensure that it is correct. For example, some benchmarking studies will mingle different ﬁscal years. Other benchmarking studies may mechanically cull data from a proxy statement without any analysis, and thus could, for example, use an “annual salary” amount that actually is for a partial year.
While many companies have used these benchmarking studies as a rigid guide to setting executive compensation, the better practice is to apply both an objective and subjective analysis of the data. In other words, the data are ﬁrst quantitatively reviewed and then qualitatively reviewed. The reason for this is that each company has its own particular set of facts and circumstances, and square pegs should not be forced into round holes. . 7 CEO Benchmarking Study Template Total Cash Comp Stock Awards Stock Options Other LTI Total LTI Other Comp Total Comp The Importance of Compensation Committee Meeting Minutes 29 the median CEO salary of the peer group is determined to be $500,000, and the salary of the subject company’s CEO is $650,000.
8. The board monitors company performance with industry comparative data. 9. Board members stay abreast of issues and trends affecting the company, and use this information to assess and guide the company’s performance not just year to year, but in the long term. 10. Board members comprehend and respect the difference between the board’s policymaking role and the CEO’s management role. 11. The board acts to help the CEO by setting clear policy. 12. Board goals, expectations, and concerns are honestly communicated with the CEO.