Does it make sense for corporate CEOs to receive generous bonuses and multimillion pay packages while their employees are laid off and their businesses go under? Jack Mason, Group CEO of the Manchester-based creative, collaborative digital group Inc & Co, says that particularly now, in the midst of a pandemic, it’s time to rethink that outdated model and make employees the central focus.
Any successful leader, Jack Mason argues, draws his or her success in large part due to the quality of the people he or she hires. Building a business requires a keen eye for the best talent, Mason says, and that ability to spot and reward talent is what has made his business thrive. Those employees, with their carefully selected strengths and skillsets, collaborate on the business’ shared mission — in his case, providing a platform for digital startups so they can reach their full potential. And, Mason says, how you treat your employees speaks to your company culture and is a direct reflection on your brand. Are you the kind of business where employees feel valued, celebrated, and supported? To attract the best talent, he says, that’s the kind of culture top talent demands.
Jack Mason’s Manchester-based business collective Inc & Co is a company that prides itself on its relationships with employees and clients. Inc & Co supports a number of digital startups such as e-commerce apparel company Brass; data firm, Insight Analysis; marketing agency Neon; and on-demand laundry service Laundrapp, providing expertise around operational needs such as marketing, HR, finance, and recruitment, to allow their clients to focus on delivering services and growing their client base. Through incspaces, they also provide digital startups with unique, full-service office environments in Manchester, London, and Leeds.
His business, said Mason, is all about people. And he argues that weathering the economic downturn caused by the global pandemic means retaining the best people at all levels of the company, even if it requires a reduced bonus or pay cut for the CEO.
Too often, Mason argues, CEOs receive exorbitant pay packages even when their companies are performing poorly. Consider AT&T, he noted, whose then-CEO Randall Stephenson received nearly $32 million in compensation last year, while about 20,000 AT&T workers lost their jobs. And when the COVID-19 pandemic put financial pressure on a number of other major brands, including Hertz, J.C. Penny, and Neiman Marcus, they, too, sent their CEOs off with six- and seven-figure payouts before filing for bankruptcy. In fact, 18 major companies have doled out big payouts to CEOs totaling £100 million before bankruptcy filings since the pandemic began.
Richly rewarded executives at the helm who led companies into bankruptcy while leaving employees jobless and facing a terrible unemployment rate cannot be justified, Jack Mason said. Companies can’t argue that these ultra-high CEO bonuses and payouts are good for retention — as upper-tier executives are not currently in high demand. Instead, he said, companies should adopt a people-first approach that rewards executives for specific metrics such as avoiding bankruptcy and for leading successful restructuring efforts that prioritise employees.
A study in the Harvard Business Review which looked at data for thousands of CEOs across five decades found that compensation policy is incredibly important for a business’ success, both by shaping executive behaviour and in attracting specific types of executives to an organisation. Yet, the study finds, CEO pay is not typically tied to superior performance, nor are there typically penalties for poor performance. CEOs are also not often required to be substantial owners of company stock, the study found, nor are they threatened with dismissal when performance is poor. This means that CEOs aren’t properly incentivised to maximise company value and creates the kind of situation we’re seeing now, Mason said, where many CEOs are more inclined to look out for their own self-interest.
But the employees that get lost when poor performance leads to bankruptcies and layoffs have real value, Mason said.
Company employees aren’t just facing an economic crisis if they lose their jobs during the pandemic, but also a massive health crisis. If companies can cut back on excess compensation for CEOs in the downturn, he says, they can better protect their employees — or at least stave off bankruptcy to buy additional time for a rebound.
Some companies, Mason notes, are taking the right approach. A number of industry leaders have made public announcements that they are taking partial or full pay cuts in light of the economic downturn. It’s a move, that is both good business practice and a highly effective public relations strategy.
CEOs who have chosen to forgo their salaries include Marriott CEO Arne Sorenson, who also noted that the pay of all senior management would be cut in half. Both the Hyatt CEO and board chairman announced that they were giving up their salaries until May as well. A number of airline industry executives have done the same, with the CEOs of Delta, Alaska Air, and United all cutting their own salaries.
Real leadership, says Jack Mason, means putting the company and its employees first. It’s that approach, he said, that has underscored his own success in building Inc & Co, which has not only weathered the pandemic but actually expanded to include a sister company, incspaces.
Jack Mason’s leadership experience in the digital space has made Inc & Co a trusted home for digital startups looking to expand their reach and even thrive in the current economy, where so much commerce has shifted online. Inc & Co focuses on providing startups with a suite of support services in marketing, human resources, and financing.
Mason has remained focused on collaboration and growth, and even with the pandemic, Inc & Co has made impressive progress, including a £10 million turnover and an 11% increase in month-on-month income, as well as an increase in hiring.
People, says Mason, are central to his business, and by focusing on finding and retaining the right talent with the necessary skillsets and giving them job security, he is securing the future success of his business. Read more about Jack Mason and Inc & Co’s transformative solutions.