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What to reward executives for? A taxonomy of performance metrics in executive incentives supplemented by an overview of business practice
No full textExecutive target setting and linking it to incentive systems, proves to be a complex process. Moreover, boards are under increasing pressure to use a balanced set of (strategic) performance metrics, and to look beyond financial indicators. Key performance indicators (KPIs) are defined as critical indicators demonstrating a company’s progress towards its key business objectives. The challenge many boards and companies are facing, is two-folded. On the one hand, there is an increased focus on the use of non-financial performance metrics to be included as a driver in executive incentive systems. On the other hand, companies are also having difficulties to find the right set of financial KPIs and often tend to use “easy-to-measure” data while the real challenge is about finding the more critical KPIs, taking into account shareholder structures, business cycles, level in organisational hierarchy, but also being aware of the drawbacks caused by at least some financial KPIs. Vlerick Business School’s Executive Remuneration Research Centre has developed this paper in order to inspire practitioners looking for the ‘right’ financial and non-financial KPIs, both underlying short-term incentives and long-term incentives. It does so by providing a taxonomy of different indicators that can be used. On top of this, the reader will be inspired by the inclusion of a large set of real-life examples (more than 100!) found in remuneration reports of Stoxx Europe 600 companies as a key source of inspiration, grouped by type of KPI. The objective of the paper is not to be prescribing by providing the ultimate set of KPIs, which would be a mission impossible as this is highly dependent on each firm’s specific situation. Rather, the objective is to take a broad and non-prescribing perspective by providing an encompassing overview and inventarisation of performance metrics used in executive remuneration. As such, it offers a guide to improve the choice of key performance indicators by summarizing examples and inspiring practices. Needless to stress that KPIs need to be deduced from the firm’s strategy and the objectives the firm wants to achieve
Management accounting
No full textManagement accounting bespreekt het gebruik van kosten- en opbrengstinformatie in een beslissingscontext en geeft een helder antwoord op belangrijke vragen. Met welke instrumenten en welke informatie kan de manager beslissen over acties voor zijn organisatie? Hoe kunt u uw capaciteit optimaal benutten, producten afstoten of promoten, budgetten opmaken en een managementcontrolesysteem opzetten? Wat zijn de verschillende deelelementen van een managementcontrolesysteem? Hoe volgt u het budget op via variantieanalyse? De auteurs besteden aandacht aan concepten als activity based budgeting, beyond budgeting en benchmarking. Bovendien is het boek zeer geschikt voor zelfstudie: heldere samenvattingen aan het einde van elk deel; praktijkgerichte situatieschetsen; talrijke oefeningen
The human-digital interface: Trust and acceptance of artificial intelligence in supply chain advancing planning systems
No full textThe road to economic recovery: Pandemics and innovation
No full textWe investigate the economic consequences of pandemics from an idea-based theory of economic growth. Following a pandemic, innovation output is disrupted for approximately seven years. The duration of a pandemic has a strong effect on innovation output. Pandemic shocks lead to a short-term drop in the number of patent applications. The effect of pandemic shocks on innovation output varies between countries and sectors.In this paper, we investigate the economic consequences of pandemics from an idea-based theory of economic growth. We assume that pandemics pose a threat to research productivity and analyse the long-term consequences of pandemic shocks to innovation output. We demonstrate that following a pandemic, innovation output is disrupted for approximately seven years. The effect of pandemic shocks on innovation output varies between countries, and sector to sector regarding economic activity. Pandemic shocks lead to a short-term drop in the number of patent applications. Crucially, the duration of a pandemic has a strong effect on innovation output. Overall, the effects of this most recent pandemic on future innovation output, and subsequently on growth, are expected to be felt long into the future. This paper supports the policies designed to reduce the effect of the “Great Lockdown” on research productivity. Policies that target the more innovative firms are moving in the right direction in terms of reducing the time it will take for innovation to recover from the effects of COVID19
Negotiation strategy: A cross-cultural meta-analytic evaluation of theory and measurement
No full textNegotiation theorists conceptualize negotiation strategy from a behavioral or a motivational perspective and negotiation researchers code transcripts or collect negotiators’ self-reports to operationalize it. This meta-analysis evaluates the functional similarities and differences between these different theoretical perspectives and approaches to measuring negotiation strategy as it predicts joint gains. We analyzed 3,899 unique negotiations from 76 independent samples and
46 different papers. Our results reveal that motivational and behavioral theories and self-report and behavioral coding measurements yield similar predictions and are functionally equivalent, significant predictors of joint gains. On the other hand, our analysis testing culture (Western versus East Asian, South Asian and Middle Eastern samples) as moderator reveals that the current theories and methods of measuring negotiation strategy are only significant predictors of joint gains in Western culture samples
A shift towards more sustainable mobility solutions - Mobility from a Rewards and Sustainability Perspective
No full textWith this “Mobility from a Rewards and Sustainability Perspective” whitepaper, the Centre for Excellence in Strategic Rewards wishes to focus on the importance of sustainable mobility. Mobility remains an important element in the total remuneration package, with key dimensions such as the company car, the offer of choice in mobility, and the shift towards more sustainable mobility solutions. Thanks to the collaboration with the Association of Belgian Enterprises, Voka, Hudson and Claeys & Engels, no fewer than 320 companies have provided their input on the mobility theme. This included surveying current practices as well as opinions and challenges, and also asking employers to share their experiences with regard to employee attitudes. Thanks to the good spread in terms of size, these 320 companies offer a good representation of the business landscape in Belgium. 26% of the companies in the sample employ more than 1,000 employees, while 27% employ fewer than 100 employees. The aim of the study was to identify the extent to which companies are committed to a sustainable mobility policy and how they manage this. In addition, the companies were asked about their perception of the attitude of their employees and the priorities they identify for the future. A first remarkable finding has to do with the satisfaction of the companies with their mobility policy. Almost half (45%) of
the companies indicated that they are not satisfied with their own mobility approach, another 29% are somewhat satisfied, and only 26% are satisfied. It is notable that companies that offer more options in terms of mobility are also more satisfied with their policy. Zooming in on the mobility options that companies offer their employees, the company car is by far the most common option (73%). This is followed by the bicycle (38% for the electric bicycle, and 34% for the non-electric bicycle). It is clear that the bicycle has become much more established in large companies. While 75% of the larger companies (more than 1,000 employees) in the sample offer a bicycle, the percentage is a lot lower –
42% – for the relatively smaller companies. There are still steps to be taken. For example, fully electric vehicles are currently included in the fleet in only 37% of the companies in our sample. Therefore, it is not surprising that only
15% of the companies provide a charging card, and only 13% provide a charging point at home. In addition, short-term use of public transport (e.g., semi-annual subscription, day tickets) is not really established. The research also paid
attention to the way in which companies manage their mobility approach. A growing number of companies offer multiple mobility options as part of the reward package, but it is noticeable that digital tools are rarely used to facilitate
this. For example, it was found that only 13% of the participating companies offer their employees an application to manage their mobility options. An important step towards sustainable mobility is to set concrete targets. Here
too, it appears that there is still work to be done: only 28% of the companies set targets. These can consist of a restriction on the fuel card, reducing the number of kilometres driven, reducing the CO2 emissions of the fleet, etc. Finally, opinions and priorities were also surveyed. This showed that the car remains an important part of the remuneration package. However, it turned out that the employees themselves are not the driving force in the transition to sustainable mobility. The companies look to the government for this: they indicate that the tax regime has a major impact on their decision-making regarding mobility, and they expect the government to be (more) decisive. Therefore, taking the employees’ opinion into account, it will come as no surprise that reducing the fleet is not an immediate priority for the companies. The main priorities are: increasing the number of fully electric cars, offering more flexibility with regard
to transport modes, and changing the employees’ behaviour in terms of mobility.Hudso
Individual differences in the susceptibility to forecasting biases
No full textSummary We set out to investigate whether interindividual differences in cognition affect the susceptibility to four forecasting biases: (a) optimism bias, (b) adding noise to forecasts, (c) presuming positive autocorrelation when series are independent, and (d) trend damping. All four biases were prevalent in the results, but we found no consistent relationships with cognition (cognitive style, cognitive reflection). Our sample included both novice and expert forecasters. They did not differ significantly in their susceptibility to biases. The lack of individual differences in bias susceptibility suggests that universal approaches to debiasing are possible.This work was supported by the FWO-Research Foundation Flanders for Shari De Baets
Special Issue “Innovation, Policy, and Regulation in Electricity Markets”
No full textThe rise of intermittent renewable energy generation, the coming mass penetration of electric vehicles and moves to decarbonise the gas grid are leading to widespread innovation experiments within electricity systems and their associated markets [...
Digital operations: Autonomous automation and smart execution of work
No full textThe integration of digital technologies is changing the way organizations operate and deliver value. Digitizing operations may replace manual work through increased automation, but it may also enable smarter execution of workflows thereby augmenting human work. Evaluating the level and reach of these three pillars--digitization, automation, and smart--across the organization’s value chain provides a diagnostic tool that can inspire future desired directions of digitization
A design thinking approach for CX-improvement in a melanoma-setting
No full textThere is still much room to improve patient experience – but service design can help to bridge some of the gaps. This report shares examples of how healthcare organisations can use service design to enhance patient experience