Current market practice in setting employment contracts for Executive Staff

Current market practice in setting employment contracts for Executive Staff

We recently undertook a survey on employment contracts for Executive staff. The purpose of this research was to understand the trends in executive employment contracts in Zimbabwe. We collected data from 39 organisations. The participants represented 15 economic sectors amongst them: manufacturing, mining, financial services, agro-processing and agriculture, transport and logistics, non-governmental organisations, quasi-government, and IT and telecommunications.

Most executives (51.4%) are on open contracts without limit of time. 24.3% of the executives are on fixed contracts.

There is a significant difference between the contract types signed by executives across different economic sectors. Most of the executives in Non-Governmental Organisations (80%), Tourism and Hospitality (67%), and Medicine and Pharmaceuticals (100%) are on fixed term contract. Most of the executives in the Mining (67%), and Financial Services (83%) sectors are on open contracts without limits.

Most of the executives (38.9%) who are on fixed term contract are on a 3 year contract.

Most of the executives in the Manufacturing (100%), Financial Services (83%) and Medicine and Pharmaceuticals (100%) sectors have contracts of 5 years.

The duration of Executives’ employment contracts for most executives in Non-Governmental Organisations (100%), Education (100%) and Transport and Logistics (100%) sectors is 3 years.

Most executives on fixed contracts in the IT and Telecommunications (100%) sector, have contracts of 4 years.

45.9% of the respondents said their executives are placed on fixed term contracts in order to motivate them to perform.
Most executives (43.6%) are offered pre-agreed gratuities at the time of termination of fixed term contracts.

Most organisations in the Mining industry (67%), Medicine and Pharmaceuticals (100%) do not offer anything on termination of fixed term contracts.

Most organisations in IT and Telecommunications (75%), Education (100%), Quasi Government (100%) offer pre-agreed gratuity on termination of fixed term contracts.

Most executives (56.3%) are given a 3 months period of notice for renewal/non-renewal of their contracts. Most economic sectors offer a period of 3 months’ notice for renewal/non-renewal of contracts for executives except the Medicine and Pharmaceuticals (100%) sector.

Our survey results shed light on the current practice of executive employment contracts. We have noted that the fixed term contract period varies significantly across companies. It would be interesting to further examine why companies choose different fixed term contract period. It is not clear at this stage which contracts and periods are more effective in motivating executives and solve company problems. The answer to this question would help companies to design more effective contracts.

The results shows that many organisations are offering open contracts without limit of time to executives. Some are offering fixed term contracts of 3 years and the major reason behind that is to motivate their executives to perform.

On termination of the fixed term contracts, most organisations offer pre-agreed gratuities. For those executives that may need to renew their contracts, most organisations offer a 3 month notice except for those in Medicine and Pharmaceuticals.

While the findings in this report give trends on executive employment contracts, what you do in your own organisation should depend on your own circumstances.

To receive the full Executive Contracts Survey Report, contact me on the details below.

Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. https://www.linkedin.com/in/memorynguwi/ Phone 481946-48/481950/2900276/2900966 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com

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