The COVID-19 health crisis brought profound change to the heart of organisations and the Spanish labour market in 2020. These changes have undoubtedly impacted companies at all levels, including their steering committees. Over the next few months, employment prospects for these key positions will be highly influenced by the current social and economic context.
These were our findings in the Page Executive 2021 Remuneration Study which reveals that, although directors’ fixed salaries are expected to remain stable throughout the year, dramatic reductions to their variable salaries are on the way. These reductions could reach as high as 60% as a result of the huge drop in profits felt by many organisations.
Talent shortage: an opportunity for growth
This abnormal situation has helped some sectors make the change they’ve long been pushing for. Take a look at retail. The sector is undergoing a digital transformation, and adapting to this new era has enabled it to minimise the impact of the pandemic. When it comes to salaries, managers’ remunerations have exceeded the average over the past decade thanks to a talent shortage. This trend is set to continue – particularly for positions like e-commerce and digital directors.
Another area that has seen favourable growth is IT & digital. Companies in this sector have reinforced their technological tools in response to the growing need to digitise business models and guarantee productivity. Likewise, we are seeing an increase in tech start-ups where positions like CTO play a fundamental role. In light of this growing demand, digital and technological profiles have seen a rise in salaries.
Constantly evolving sectors
Social conditions have completely transformed consumer habits, resulting in the total consolidation of online channels. This trend has pushed the FMCG sector to hire digital profiles and strengthen their e-commerce strategies, significantly altering their organisational structures.
Another sector that is the scene of significant change is healthcare, which has adopted a key role in responding to the global health crisis along with receiving extensive recognition. To confront today’s complexity, companies in this sector have searched for executives who are capable of navigating VUCA environments and taking on leadership roles.
Meanwhile the media & entertainment sector has made a significant step toward digitisation in order to adapt to the health crisis. While the pandemic’s impact has been negative overall, some segments such as leisure and home entertainment have seen significant growth. When it comes to wages, managers have not seen changes in their fixed remuneration, even though variable wages have decreased.
Variable remuneration in decline across sectors
The banking and insurance sectors are two of the main drivers of the economy that are currently diversifying into non-traditional activities and businesses. As a result, they are focusing on attracting diverse profiles that are less aligned with the usual products and services. Although generally, we expect a drop in variable compensation, positions related to innovation, digital transformation, and cybersecurity will continue to see a rise in salaries and new hires.
The diversity of the industrial sector has made it more difficult than ever to gain a homogeneous view of its current state of affairs. While many companies have been impacted by the pandemic, some businesses and providers that have been deemed ‘essential’ have experienced an uptake in operations. In this context, manager salaries have remained favourable and remunerations of new hires continue to be based on the candidate’s merit as well as the role itself. Nevertheless, variable pay in 2021 has been impacted in most cases, while fixed salaries are not expected to change.
One of the sectors where we can see greater stability is tax & legal. Activity here has been constant as most business decisions require legal and fiscal insight. In regards to wage policy, despite some firms freezing salaries, others have increased remuneration to compensate professionals for better performance and profitability as well as formulas linked to emotional salary.
New methods for attracting executive talent
In today’s highly digitised and complex environment, talent is a defining factor for success. Given the need to moderate salaries, what options do organisations have for attracting and retaining executive profiles? On a pay level, there are options such as severance packages or signing bonuses aimed at reducing a manager’s reluctance to make a change in times of particular uncertainty. In addition, we can see an increase in bonuses in the long term, which seek to strengthen a director’s commitment and reward their loyalty to a project, as well as pay accelerators like stock options or phantom shares.
On the other hand, we’re seeing how emotional salaries are becoming more prominent within organisations to attract management. In this way, the pandemic has opened the door to new working models and benefits linked to flexibility and a better work-life balance. When taken as a whole, these elements can substantially increase the attractiveness of a company. Alongside other factors aligned with corporate culture – such as diversity, inclusion or CSR – these elements contribute to the increase or, in some cases, a decrease of the total pay package.
Finally, we have seen a positive trend in recent months: an increase in women in management bodies. Although this does not directly impact their pay, it does indirectly lead to improvements in pay packages.
Interested in learning more about job prospects for managers in Spain? Download the full report here.
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