Financial Services

Company :

National Financial Services Business. Australian Listed. Employs 9,000.

Mandate :

To design and implement the components required to complement a re-structured organisation, including the determination of fixed pay, the magnitude and basis of performance based pay and the integration of remuneration with the broader HR strategy, in particular the behavioral changes, cultural initiatives and the proclaimed values that made the company unique and gave it a competitive advantage..

Background :

The company had recently implemented a huge re-structure roughly based around the studies and findings of Elliott Jaques. Other HR systems, including remuneration, were catching up, some slower than others. The disconnect between the pre-existing traditional pay methodologies (data based salary determination, points-based job evaluation, etc) and the new work level based simplified structure was having a number of deleterious effects. Fixed costs were blowing out, performance was being relegated behind work value assessments and annual bonuses were unfunded and standardized by work value. That is, bonuses were becoming an entitlement. In addition, as a result of these and other factors, the annual review process was increasingly inefficient every year and had progressively eroded the reputation of the HR team.

Solution :

A new strategy was devised and approved which discontinued the reliance on market surveys and job evaluation for the determination of fixed pay.  We pointed the decision maker to Total Reward - setting a target salary plus bonus figure.  When the company performed well, the business unit performed well and the individuals met their targets they would receive their target bonus. The total possible bonus expense (at an exceptional profit outcome) and the likely total (at a target profit outcome) was agreed with the Board in advance and the average individual bonus percentages, by work value, were communicated in advance. Everyone knew what they, their business unit and the company had to do to be rewarded. These solutions were implemented using our unique top-down allocation/bottom-up distribution methodology.