RR: I actually started life as an economist, working in the manufacturing and engineering arena. My role included a lot of analysis and modelling, and the organisation I was working for at the time, EEF, was looking into some pretty big industry issues. As part of my remit I spent time with a small Reward team that was helping engineering businesses with pay issues around shift premiums. This I really enjoyed, as it allowed me to apply my economics expertise to a far more people-centric set of challenges.
As for why I’ve stayed, I think that’s to do with my firm belief that rewarding and recognising people in new ways can make a massive difference to organisational success. The psychological dimension behind reward is fascinating and I learn every day that, while we see patterns in human behaviour, everyone has different reward drivers. To this day I’m still intrigued at how such concerns impact employee engagement and performance, and how companies really grapple with the challenge of introducing a fair rewards framework.
One of the things I always look out for is evidence on what works in other businesses and what research points to. Too often I see leaders dismiss an idea because, when they subconsciously think about their own drivers, they wouldn’t feel motivated or rewarded by it. For example, I’ve worked somewhere before where we didn’t implement a nonfinancial recognition plan as one leader felt ‘it wouldn’t work – I would be insulted by that’. But there are countless examples of businesses succeeding partly due to a recognition culture. Do you see what I mean? Addressing this disconnect and using a good balance of evidence and intuition is something I find really compelling as a Reward leader.
RR: I would say every reward leader should adapt their thinking for their organisational reality and understand the right philosophy is going to differ by organisation. I don’t have an overriding philosophy apart from having a strong leaning towards openness and transparency. There are so many invented truths and misconceptions around pay, the best way to bust some of these myths is with being very open about what you are trying to achieve through reward programmes and treat people like adults when the news is bad. For me openness is even more important than fairness and people can have very different views of what fairness is, particularly with an emotive topic like reward.
RR: The bonus plan at Kantar had originally come from our parent company WPP. It was embedded, had been around for years, and was predicated on year-on-year growth for Kantar Group. The challenge with this however was that we had traditionally operated as a decentralised business with the separate brands doing their own thing. When it came to calculating the bonus, the global finance team would work with local and brand finance and commercial leaders to distribute the available funds in a way that reflected the performance and budget of each individual brand.
As a result employees had little sense of how Kantar as a whole was performing, and how this related to the funding of their bonus plan. This changed however in 2016 when the business announced a fundamental re-think to the way we work, and particularly to the way we collaborate. It was understood that business growth would be increasingly dependent upon our ability to present a unified and complementary portfolio of offerings to the market, and to bring these together to deliver larger projects that increased our preference in the marketplace.
RR: There have been two distinct phases to the project: ideation and implementation. The first part, building on the strategy we had in place, was completed staggeringly quickly. In fact, I would say we took only two months to fully plan and design the structure and its constituent parts. I was actually more surprised with the time needed for implementation. I heard one innovation guru claim that any new concept is 90% inspiration and 10% implementation. My experience is probably the opposite of this due to the massive culture shift the plan was trying to foster. People were being asked to move from a bonus made up of a percentage of their base salary to one comprised of ‘units’ – with 30% of these connected to Kantar’s performance in their region, and 70% connected to individual performance.
Importantly this new approach and bonus structure applied to everybody: from the CEO down to those employees at the more junior end of the eligibility scale. It also introduced enormous complexities to the implementation, as the unit concept had to be applied to the almost 4,000 employees working in 70 different countries with different legal considerations, pay-out histories and cultures. We also had to ensure the change wouldn’t impact future recruitment. By that I mean it’s easy to say to a candidate that their proposed salary would be, for example, £90,000 and a 15% bonus. It’s a lot more complex to say: “you’ll receive 500 units for a bonus”, because what we’re talking about here is basically intangible, and therefore not open to a like-for-like comparison with an existing salary.
Ultimately, what it comes down to is demonstrating how these units promote a far more transparent bonus structure; that they will enable people to very quickly see the value of what these units represent, and how this worth is closely linked to the financial performance of the wider Kantar Group. This was the point we really wanted to get across, as it provided both the intellectual and emotive platform for driving forward our collaboration agenda. The new plan has also helped introduce greater consistency into the bonus narrative, with people both clearer as to what they need to do and more confident that they’ll be rewarded for their actions.
RR: We’ve tiered every market from A through to E, with a country like the US being in tier A as salary levels are comparatively high. Next, we factor in a person’s grade, and allow a narrow range of movement here, before calculating the total number of units each individual should receive.
From this point on, whether you’re an executive in Bangladesh or a mid-level director in the UK, the system pays out based on 30% Kantar performance in your region and 70% on personal performance and related KPIs. The overall value of each unit moves up and down depending on Kantar’s overall financial performance.
As for measuring success, I think a good place to start is the area of engagement. Under the old scheme people could receive a bonus without really understanding why. Whereas now it’s becoming more evident that people are showing a growing interest in how Kantar is doing in their locality. There’s also a greater clarity behind the financial metrics involved, with the CEO sending out quarterly emails to all participants to keep them informed of business performance and what each of them can do to bolster success. As a result, people can anticipate the value of their units, and have far greater insights into how the Kantar Group as a whole is doing. This to me is one of the biggest benefits of the plan overall, as it reinforces the collective nature of our shared destinies.
RR: Out Talent Acquisition CoE has been a key partner in helping us communicate the bonus plan to new candidates. Then there’s our Learning and Leadership CoE, who have been heavily involved in helping improve our objective setting capabilities. That said, I would suggest the critical HR partners have been the country HR leaders, who we’ve partnered with to make sure we’ve been able to implement the plan in each market. To help them implement we provided all participants with different performance scenarios so they could see very transparently how their bonus would change in different conditions.
RR: Certainly I would say the support we had from the CEO was instrumental, and the advocacy he has provided. I’ve also heard him praise the plan as being central to stimulating the types of behavioural change demanded by the business strategy, which suggests we’re heading the right direction! Even though business performance is patchy, people are more confident that we have a plan that is fairer and is consistent across the organisation. There are no side deals or a sense that your bonus pay-out is more a result of ‘pot luck’ of whether you happen to be sitting in a successful brand or not.
I have been able to talk to individuals about the benefits of having a percentage of their bonus based on corporate results, with the actual figures being announced at each quarterly review. Yet even then, there was still the inevitable suspicion in some quarters that the change was all about lowering the amount Kantar paid out each year in bonuses.
We’ve done our best to address this impression by focusing on the transparency and openness of the new plan. I believe the message is getting through, but such things take time to fully filter through.
RR: In part it’s a question of what came before, and the pervading expectations that existed prior the new plan. You can’t spend years incentivising one behaviour, then suddenly turn around and say the whole corporate strategy is moving in the polar opposite direction. That’s why I believe that changing behaviours is, in reality, dependent on local leadership more than on my team. I will also say that where leaders have been enthusiastic we can point to more of an uptick on engagement. We won’t fully be able to judge overall success until next year and many challenges persist.
Prior to the change, I convened various meetings with senior leaders across the
business to get an assessment of the overall effectiveness of different reward plans. Most elements, like employee benefits, scored five to seven out of 10. The score for the bonus plan however averaged out at two. At the time we knew that issues around funding afforded little opportunity to shake things up. Then came the change in corporate strategy, and with it a mandate to transform. It will be interesting to see how the plan would score now.
RR: Looking back, I should have probably spent more time up front working out how best to resource the actual management of the plan. Certainly, from a man-hour perspective, there have been many people involved. This of course includes the time invested by HR teams, as well as hours I spent collecting recommendations on what to pay out at an individual level. Then there’s the day-to-day management, which has now switched fully over to the Reward Centre of Expertise, giving us complete control for ensuring only the right people are being put onto the plan. In addition, we’re also keeping a close eye on promotions, and making sure that, as people climb the corporate ladder, the units they’re receiving go up accordingly.
There are processes that we oversee to make sure everything happens in consistent and proper fashion. As a result it has given the Reward team more administrative work to do, and to help alleviate this we’re in the process of launching an initiative called Reward Academy where we’ll be able to better educate HR on reward processes in a series of bite size sessions.
This also helps with the ‘holding the line’ conversations that occur across the business, and ensuring HR know the tight criteria for allowing people into this senior leadership bonus plan.
RR: There are many but the most immediate for me is the gender pay gap and how the whole inclusion and diversity agenda changes the way we think about designing and allocating rewards. Yes there is a compliance piece to this in the UK but many businesses will see they have a moral obligation to pay fairly. Everything from how we set pay for new hires to how we ensure our Total Reward offering attracts the most diverse pools of talent possible will become problems reward teams need to solve for.
I expect the current decline in the value people put on longer term rewards to continue. A person entering the world of work today at the age of 21 fully expects to have 10 to 15 different work experiences in their lifetime and the flexibility to balance different interests aside of all of that. How do we as Reward leaders incentivise retention in this emerging reality? Indeed is it counterproductive to even spend time designing retention strategies? There are more trends of course, like the relentless technological advances that will shape how reward is managed, but one thing that will likely stay constant is the basic human need to be recognised, to be treated fairly and to connect what they do at work with a greater sense of purpose.