NZ looks good to UMIEs

New Zealand, it seems, is becoming desirable career destination for upwardly mobile international executives (UMIEs). That is at least one conclusion which could be drawn from the recently released Hay Group 2003 Executive Remuneration Report.
For years we have lost our best and brightest executive talent to overseas markets, particularly Australia, but the tide appears to be turning, according to Hay Group’s country manager – information services, John Woodward. Kiwi companies are recruiting more executives from overseas than are leaving.
Hay Group is management consultancy specialising in the analysis of executive remuneration trends. Its latest report is based on the analysis of 2547 executives from 156 local organisations.
So why are overseas executives so willing to come here? – for career development and lifestyle reasons apparently. The fact that our fixed executive salary packages are improving no doubt helps, but the level of remuneration was never mentioned by survey respondents as reason for coming to New Zealand.
On the contrary, 44 percent of those surveyed said the primary reason for executives coming to New Zealand was for career development. Another 22 percent quoted lifestyle and an equal percentage said family links.
Woodward believes that just as our managers go overseas for experience, executives from other countries increasingly see New Zealand as desirable career and experience-enhancing destination. New Zealand organisations are small by world standards and offer broader executive experiences. Or we might be attracting young executives doing some form of “country service” on their way to bigger and brighter things as they progress through the management ranks internationally.
The survey’s primary focus is, of course, executive remuneration. And on that front too, trends in New Zealand are looking positive, at least from the recipient’s perspective. Increases in fixed executive packages over the past 12 months have grown on average, by eight percent for CEOs and by five percent for senior managers. They are expected to remain “robust”.
According to Woodward, pay inequities between CEOs and staff in New Zealand are not as pronounced as in Australia or the United States. The median remuneration paid to New Zealand CEOs is 12 times average weekly earnings. In Australia the multiple is 36 times average earnings and the multiples are even higher in the US and the United Kingdom.
The target level for executive incentives has remained constant at around 13 percent of fixed executive remuneration. This is much less than in Australia where incentive payments average 30 percent for all senior executives and 45 percent for CEOs.
The pay differential with Australia and other countries is no doubt the greatest motivator for talented executives leaving New Zealand. The “brain gain” might have started but as the report points out, “the loss of executives across the Tasman continues to be concern”.
“The exposure of many New Zealand executives to Australia through in-market activities inevitably leads to job offers, often at substantially higher pay rates,” it adds. Some New Zealand corporates are trying to combat “this growing gulf” by setting their fixed remuneration policies with Australia in mind. About one third of our top 50 companies are apparently “consciously making allowance” for the impact of the Australian market on their ability to attract and retain people.

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