As you know, the executive compensation and governance landscape is increasingly complex. Scrutiny abounds from shareholders, proxy advisers, governments, employees, and the media, who are demanding that executive pay be aligned with performance and appropriate levels of risk taking.
Selecting an executive compensation consultant is a big decision. The right executive compensation advisor will help you strategically design competitive executive compensation programs that attract, motivate, and retain leaders while protecting the company from governance, tax, and compliance risks.
Here are some practical tips to help you identify the right executive compensation consultant.
Key considerations when evaluating executive compensation consulting firms
- Expertise & qualifications: Review the consultant’s track record (not just the firm brand). Also consider the consultant’s experience to confirm similar company size and ownership structure (e.g., private vs. public) and industry-specific experience, which ensures they will understand as well as anticipate your specific challenges.
- Tailored solutions: One-size-fits-all rewards programs rarely fit. You want a strategic approach that aligns executive pay with company strategy, culture, ownership structure, and long-term goals. Use a data-driven, individually tailored approach to maximize the effectiveness of executive compensation programs.
- Independence: Executive compensation consultants advise the company’s Board of Directors and must be able to challenge the company’s leadership. Confirm the consultant’s independence to avoid conflicts that could undermine or influence their recommendations. While the Securities and Exchange Commission mandates a six-factor independence test for US publicly traded companies, private companies should also put independence standards in place.
- Industry experience: Deep, relevant experience means the consultant understands market practices, peer groups, governance norms, and role-specific benchmarking for your sector.
- Data: Data is table-stakes, because it underpins all other recommendations. Look for a consultant that can bring best-in-class data to inform decisions.
- Communication & Board fit: Consultants must translate data and design choices into clear, persuasive briefing materials for the Board of Directors and Compensation Committee. Keep in mind the preferences of your Directors when assessing the communication style and personality of the possible executive compensation consultant.
How to find an executive compensation consultant
Define the scope: When you set out to find an executive compensation consultant, define the scope of the relationship early and clearly. Sometimes this could be accomplished by drafting and distributing a Request for Proposal (a.k.a., an RFP). Other times the scope of the project will be defined through meeting with the consultant and documenting steps and outcomes, along with price, in a scope of work. Projects or services typically include strategy redesign, executive and/or director benchmarking, incentive plan design, metric selection, or other, more niche one-off reviews relative to the company’s particular situation.
Conduct focused interviews: Ask who will do the work, their relevant deals/projects, proposed methodology, data sources, timeline, and measures of success.
Request a sample plan or approach: Prefer a short, tailored proposal over a generic pitch? Ask for sample methodologies for the projects defined in your scope of work.
Test responsiveness: Take note how promptly and clearly consultants respond during the selection phase—it foreshadows engagement service levels.
- Know your needs before you meet candidates.
- Prioritize demonstrated outcomes and client examples over slick presentations.
- Choose a team with credibility at the Board level and practical implementation experience.
- Balance cost with the value of independence, fit, and custom insight.
A well-chosen executive compensation consultant is a strategic partner. Investing time up front is crucial for identifying a consultant team who understands your business, can challenge constructively, and will deliver a clear, implementable compensation strategy.
Mercer is here to help
Mercer has over 350+ consultants in the US that are focused on executive rewards, with another 50+ consultants available outside the US. We have class-leading executive compensation data from Mercer’s Global Disclosure Database (GDD), Mercer Benchmark Database (MBD), and a suite of focused surveys. Contact us at 855-286-5302 or email surveys@mercer.com to get started with our team today.
About the author
Brandon Hale, Technical Solution Leader, Executive Rewards
Brandon has over 10 years of experience with Mercer working in executive compensation. Based out of San Diego, he currently serves as the Technical Solution Owner for Mercer’s U.S. and Canada Executive Rewards Practice.
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