Companies call culture a strategic asset.
Then employees give difficult feedback, HR builds an action plan, managers attend a workshop, and the CEO’s compensation discussion moves on.
What would change if the employee experience affected the CEO’s paycheck?
The Dive
ASML CEO Christophe Fouquet says a new Workplace Experience Index will influence senior leaders’ long-term incentives, including those of the Board of Management.
According to Business Insider’s reporting, the announcement followed a decline in employee engagement from 78% to 73.5%. The index draws on six survey questions addressing issues including:
trust in leadership
speaking up without fear of retaliation
role clarity
managers’ care for employees.
Those conditions connect directly to leadership decisions.
Executives choose which priorities get funded, how much change the organization takes on, and whether staffing matches expectations. Employees experience those choices as workload, clarity, and the ability to get things done.
When that experience deteriorates, HR can help diagnose the problem. Managers can improve daily working conditions. But they cannot reliably fix conflicting demands or unrealistic commitments made above them.
Accountability needs to reach the people making those commitments.
ASML’s announcement is a start. The financial consequence remains unclear: The company has not disclosed how much executive pay will depend on employee feedback.
That is a consequential detail. A measure can appear in a compensation plan and carry so little weight that leaders can comfortably ignore it.
There is another design problem: once someone’s pay depends on a survey score, they have an incentive to influence the answers.
Boards need to reward improvements employees actually experience while protecting their freedom to report what is wrong.
The Save
Before adding culture to executive compensation, get specific about what makes the commitment credible.
Define what leaders are responsible for. Choose conditions leaders can influence, such as clear priorities and employees’ ability to raise concerns. “Make employees happier” leaves too much room for interpretation.
Make the consequence meaningful. Decide what poor results would cost an executive, and whether strong financial performance can erase that consequence. If damaging working conditions never affect the payout, employees will notice.
Protect honest answers. Preserve confidentiality and make pressure for favorable responses unacceptable. A better score means little if people have learned to keep quiet.
Check what actually changed. Look beyond the company average. Compare survey results with employee comments and turnover. Require leaders to explain what they changed and whether employees experienced an improvement.
Difficult decisions will still be necessary. Employees can disagree with a decision and trust the leader making it. Leaders remain responsible for fair treatment and clear explanations.
Bring this question to your next compensation discussion:
If a CEO meets the financial targets while damaging the organization’s ability to keep delivering, have they earned the full reward?
Calling culture strategic creates an obligation to hold leaders accountable.
The compensation plan should reflect that obligation.
Your Turn
If part of your paycheck depended on your team’s experience at work, what would you change first?
Reply and tell me. I read every one.
Talk soon,
Anita
This is Issue 15 of Live Wire, a weekly jolt of candid thinking for CEOs, founders, and people leaders who know culture isn't a side project, it's how a business performs. I'm building this alongside my upcoming book: Everyone Sells.