Center Webinar Offers Tangible Guidance on Selecting an Independent Compensation Consultant

The Center hosted a members-only webinar on May 31 featuring Tracy Keogh, Chief People Officer and Growth Partner at Great Hill Partners and Blair Jones, Managing Director at Semler Brossy, who shared their experiences and insights in the process of selecting an independent compensation consultant, providing performance feedback and onboarding a new consultant.

Center CEO Ani Huang kicked off the session by reviewing the Center Member survey findings that although the majority of companies do not have a formal policy requiring the rotation of compensation consultants, many companies consider scanning the market after a certain amount of time and there are also common triggers for a change, such as a new Compensation Committee Chair. She also reviewed the key components addressed in the Guide such as who takes the lead in the search, how many firms are considered, how the RFP should be tailored, who hears the pitches and best practices for reference checks.

Then, Rich Floersch led a Q&A with Ms. Keogh and Ms. Jones on key considerations in planning for an RFP. Ms. Jones commented on the importance of alignment from the early planning process, indicating that “the CHRO and Chair should gain alignment on what they are looking for in a consultant and the preferred working style. This will help prioritize needs and shape the questions to ask consultants.”

Some suggested questions to ask:

• What level of engagement is preferred? Do we want a consultant who is “in the trenches” as a working partner or more of a liaison between management and the committee?
• What working style is preferred? Do we want deep technical knowledge or seek a consultant focused on strategic thinking like future trends and broader talent issues?
• Do we want a one or two- consultant model for the committee and/or management?

Ms. Keogh described that in her experience as a CHRO, Chairs often wanted her to lead the process: “Most consultants will be super knowledgeable so you should look at how their materials are presented. Are they transparent? How well can the consultant make a complex topic like compensation simple and engage each committee member whose levels of expertise may vary?” She recommended considering the consultant’s network and contributions to the profession through their thought leadership and speaking engagements. Ms. Keogh reflected on the importance of the consultant being balanced and working well with management in addition to the committee.

Ms. Jones suggested that assigning a special project to a leading candidate is a great way to learn how the consultant thinks, organizes information, and presents their ideas.

Both panelists provided best practices for effectively onboarding the new consultant into the organization. Ms. Keogh suggested the consultant meet with business leaders to glean context on how compensation plans are perceived and understand the history. Ms. Jones discussed the importance of in-person working sessions with the CHRO who is “an important ambassador because of how closely this position works with the committee” and can help bridge relationship building between the consultant and the organization.

Of course, the selection process is just the beginning as it is important for the Committee to work with the CHRO and management to set expectations and provide feedback on a regular basis.

For more, check out the new CHRO Guide to Selecting an Independent Compensation Consultant which contains additional tips on navigating the search process, evaluating performance of the consultant and onboarding new consultants.