As Consulting predicted last summer, the mega-combination of Watson Wyatt and Towers Perrin has indeed led to the departure of some of the firms' top talent. One of the most senior departures, to date, has been Steven Van Putten, North America East Region Practice Leader of Watson Wyatt's Executive Compensation Consulting Practice and North American practice director of the firm's performance metrics and measurement group. Independence rules prevent the same consultancy from advising management and the board on executive compensation, making departures like Van Putten's all the more likely as conflicts are resolved. Consulting's One-on-One recently sat down with Van Putten to better understand his new role as a managing director for executive compensation specialist Pearl Meyer & Partners.
Consulting: Why did you leave Towers Watson?
Van Putten: Generally, I think, for what the firm is trying to accomplish, joining with Towers Perrin makes a lot of sense. The combined firm is now better positioned to provide integrated solutions for its clients. As companies becoming more global, they want to work with consulting firms that are also large and global. However, the deal didn't make sense for me. Because of my role as a compensation consultant the merger created challenges to my role as an independent advisor.
Consulting: What attracted you to Pearl Meyer & Partners?
Van Putten: First, I really love executive compensation work. When I graduated form business school 15 years ago, most of my colleagues were looking at management consulting careers. It appealed to me, but so did a corporate finance career. And so I started looking for ways to marry both the people side and numbers side of business. So, it's always been a passion of mine. I enjoy working at high levels within organizations, developing compensation programs. I truly believe in the power of incentives. I believe a well-constructed incentive program can motivate actions and behaviors that align with what a company is trying to achieve. My career path, within a full-service firm environment, gave me the opportunity to work with many different companies. What attracted me to Pearl Meyer specifically is that independence issues do not confront it. I think we'll likely continue to see a lot of executive compensation work move toward boutiques. Pearl Meyer is one of the larger boutiques and therefore has more critical mass than many smaller boutiques.
Consulting: Where are the biggest market opportunities today for executive compensation consultants?
Van Putten: The convergence of forces impacting executive pay is unprecedented. Companies are fending off inquiries from the media, Congress, investor shareholder groups, etc. Companies are trying to come to grips with how to handle these outside pressures, and, at the same time, make sure they have executive compensation plans that motivate sustained performance and hold executives accountable.
Consulting: What kinds of compensation plans are striking the right balance?
Van Putten: The companies that are having the most success are those that are really trying to differentiate the best performers, who pose the biggest risk of leaving, from everyone else. The goal is to give greater rewards from a fixed pool to your top performers to encourage retention for a longer period of time. This is still a work in progress for many companies.
Consulting: Why is this so challenging?
Van Putten: People want to be paid for what they do. People want to be recognized for the services they do. However, most firms focus on the greater organization and less about the individual. Compensation incentive programs that recognize firm performance usually don't drill down to line of site around individual performance. Now that we're hopefully beyond the recession, our clients will continue to focus on these challenges. Given the vast array of challenges facing executive compensation committees today, business has never been better.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.