According to a new global study by consulting firm WTW, human capital metrics have become board-level priorities directly linked to C-suite bonuses. Up to 81% of companies now tie executive compensation to people-related metrics, transforming how HR initiatives get resourced, measured and executed.
Human capital focus intensifies
The study, which analyzed 1,070 public companies across 18 markets, found that despite a decline in diversity, equity and inclusion metrics in executive incentive plans, overall focus on human capital intensified.
In North America, 71% of companies included at least one people-related metric in executive incentive plans, while 81% of European companies did. The most common metrics are employee engagement, succession planning, culture and employee retention.
A new kind of leverage
This represents a critical touchpoint for HR leaders navigating budget discussions, technology investments and strategic planning. When retention rates are tied to the CEO’s bonus and board oversight, these aren’t HR programs that leadership can politely acknowledge and underfund. They’re business-critical metrics that create real accountability, according to the WTW report.
“The broad use of people metrics is consistent with the focus of boards as they continue to prioritize their role in the oversight and governance of people risks, investments and opportunities,” says Kenneth Kuk, senior director of work and rewards at WTW.
Read more: CEO priorities in 2026 and how they impact HR leaders
The analytics gap becomes risk
The practical implications may be significant for CHROs. If executives are being measured on succession planning or culture, HR functions that lack robust measurement systems and strategic frameworks face a gap that creates genuine business risk. This forces a level of analytical sophistication and strategic accountability.
The study found that globally, 80% of companies incorporated at least one ESG metric in their executive compensation and incentive plans. Three-quarters used these measures in short-term incentive plans, while 32% used them in long-term incentive plans.
Notably, only 9% of ESG metrics among S&P 500 companies appeared in long-term incentive plans, suggesting boards see people outcomes as immediately measurable but may not yet view them as long-term value drivers.
“[Boards] are concentrating on developments in labor markets, skill shortages, employee retention and labor costs,” says Kuk. He adds that these developments are “critical to company strategy and competitive advantage amidst geopolitical shifts and technology-driven business transformation.”
Credit: Source link
