Aligning reward with business strategy at BAT
| Pages | 12-13 |
| DOI | https://doi.org/10.1108/14754390580000602 |
| Published date | 01 March 2005 |
| Date | 01 March 2005 |
| Author | Malcolm Douglas |
| Subject Matter | HR & organizational behaviour |
12 Volume 4 Issue 3 March/April 2005
REWARDS
,
Short case studies that demonstrate best practice in rewards
Aligning reward with
business strategy at BAT
customers. BAT is justly proud of the
claim that we know our consumers
better than our competitors because of
our specially developed market research
tools. I realized that I could do similar
work to find out more about my
customers: BAT’s employees.
That started me on the road of
employee opinion surveys, first with a
bespoke program and then a survey that
gave us the opportunity to compare
results with other companies. In 2000 we
brought out a company-wide survey that
goes beyond pay and benefits. Finally,
BAT introduced the group-wide surveys,
Your Voice and Viewpoint.
From these vehicles we learned that
employees felt pay was often over-
complicated. Many employees felt that
it “just happens” and there was little
involvement from line managers. Pay
was simply calculated using automatic
pay matrices.
Researching the drivers of change
In 2000, we commissioned a project
where we asked employees about the
company’s reward structure. This
involved one-on-one interviews, focus
groups and research with other
companies around the world. We
needed to bring our reward policies up
to date and set a standard to aspire to.
This process lead to the production of
our “reward drivers” – the principles of
change to our reward system:
•Reward performance, contribution
and achievement.
•Managers decide about reward.
•Reward systems must discriminate
performance, not on ethnic origin,
nationality or gender.
•Only a few aspects of reward are to
be centrally determined.
•Employees should have more choice
about their benefits.
•Communicate overall value of
remuneration to all staff.
•Keep reward systems design clear and
simple.
We wanted employees to have greater
choice and flexibility in selecting
benefits to suit their personal situation.
Benefits would include provision for
retirement and ill-health protection
consistent with the market concerned,
but other elements would depend on
the maintenance of competitive terms.
Managers were given the offer of a cash
alternative where practicable.
Sharper communication on the
overall value of the total reward
package was important as were regular
feedback mechanisms for assessing
managers’ views on reward and its
impact on the business. The design of
reward programs should aim to be as
simple and as clear as possible.
Rationalizing reward
In the UK we worked toward meeting
T
wo key drivers have shaped the
changes to BAT’s reward structure.
First, it played a key part in driving
the organization’s commitment to
Stephen Drotter’s “leadership pipeline”1
concept. The pipeline has six levels, from
“managing self” up to “enterprise
manager.” By establishing appropriate
requirements for the six leadership
levels, companies can greatly facilitate
succession planning, leadership
development and selection processes.
We announced how the pipeline
would be introduced into BAT and
changed the way we carried out
performance appraisals in order to
support it. As part of that process we
tried to clarify how we described roles
and also modified reward.
Knowing HR’s customer
The second driver was a desire to know
more about our internal customers.
Working for a consumer goods company
has made me very interested in my
customers as well as the company’s
British American Tobacco is the world’s
second largest quoted tobacco group. It
has more than 300 brands and does
business in 180 markets. It produced 792
billion cigarettes in 2003 and employs
more than 85,000 people worldwide.
BAT
Malcolm Douglas, remuneration and benefits manager at British American Tobacco, explains how its reward
architecture has helped align rewards with companywide objectives.
© Melcrum Publishing Ltd. 2005. For more information, go to www.melcrum.com or e-mail info@melcrum.com
To continue reading
Request your trial