Executive pay skyrockets on talent shortage, says PwC

What you need to know:

This pressure to attract and retain talent in a competitive labour market, though lucrative for workers with special skills, is forcing employers to widen the scope of performance-related compensation leaving in their hands a heavy executive cost burden.
This is the verdict of 201 chief executives in 10 of Africa’s largest markets including Kenya, Nigeria and South Africa with company heads saying the mismatch between university training and corporate needs has worsened the talent war.
The CEOs said that good business ideas are being copied with speed, forcing employers to be constantly on the lookout for innovators. This type of thinking is making human capital the most sought after resource in the production system and an arsenal for firms seeking to grow.
This outlook means that executive pay will continue to outpace that of rank-and-file employees as companies race to retain their top talent.
Executives in most of Kenya’s blue-chip companies recorded double digit growth in pay last year in a period when ordinary employees saw their salaries rise by single digit.

Employers will be forced to pay hefty salaries and offer lucrative perks to hire and retain the executives they need to stay ahead of the competition in a growing market, PricewaterhouseCoopers (PwC) has said.

This pressure to attract and retain talent in a competitive labour market, though lucrative for workers with special skills, is forcing employers to widen the scope of performance-related compensation leaving in their hands a heavy executive cost burden.

This is the verdict of 201 chief executives in 10 of Africa’s largest markets including Kenya, Nigeria and South Africa with company heads saying the mismatch between university training and corporate needs has worsened the talent war.

“The need for high-potential managers has placed a premium on their worth and so it’s no surprise that managing talent is at the top of the CEO agenda,” says the PwC report dubbed The Africa Business Agenda.

“Over half (54 per cent) of CEOs in Africa say that talent-related expenses rose more than expected over the last 12 months and many complain anecdotally about poaching and poorly-trained and inexperienced managers.”

The CEOs said that good business ideas are being copied with speed, forcing employers to be constantly on the lookout for innovators.

This type of thinking is making human capital the most sought after resource in the production system and an arsenal for firms seeking to grow.

In top demand are people who are technologically literate, globally astute and capable of not only developing but also executing strategy — forcing most blue chip firms to widen their nets to include Africans in the diaspora.

“CEOs in Africa are not limited to a local talent pool,” says PwC. “Forty-eight per cent of CEOs in Africa say that it is getting more difficult to hire workers in their industry and the two most difficult groups of employees to recruit and retain are high-potential middle managers and senior managers.”

This outlook means that executive pay will continue to outpace that of rank-and-file employees as companies race to retain their top talent.

Executives in most of Kenya’s blue-chip companies recorded double digit growth in pay last year in a period when ordinary employees saw their salaries rise by single digit.

For instance, executive directors of Kenya Airways — Titus Naikuni (CEO) and Alex Mbugua (group finance director) — saw their pay rise 24 per cent the year to March to Sh82 million and this means they shared a monthly package of Sh6.83 million, up from last year’s Sh5.5 million.

READ: Top Kenya Airways executives’ pay goes up by 24 per cent

Bank executives also saw their pay last year rise by double digits — reflecting how far corporate Kenya is going to retains tar talent. This is forcing employers to raise fixed salaries and widen the scope of performance-related pay to include bonuses and shares.