Involving employees in redesigning reward at Centrica
| Date | 01 July 2005 |
| Published date | 01 July 2005 |
| DOI | https://doi.org/10.1108/14754390580000814 |
| Pages | 12-13 |
| Author | Marc Bishop |
| Subject Matter | HR & organizational behaviour |
12 Volume 4 Issue 5 July/August 2005
REWARDS
,
Short case studies that demonstrate best practice in rewards
Involving employees in
redesigning reward at Centrica
cons and – as is common in this type of
situation – a lack of real understanding
about their reward package meant that
both felt the other group was better
off. This perceived unfairness provided
the “burning platform” for changing
reward at CBS. Other change drivers
included a desire to better control costs
going forward and to create a closer
link between pay and performance.
First steps to change
First, we had to fully understand the
problem on an employee-by-employee
basis so we could have a very clear
picture of the position we were in. We
conducted extensive research and
financial modelling into the current
situation and the effects of any changes.
Four or five people worked on this
project from reward, HR, finance and
communication for around four months.
We worked closely with the finance
department because of the complexity
of the changes we proposed. We made
some assumptions about what type of
reward options employees in certain
demographics would choose. We tried
to model the comparison of the cost of
packages today with the cost after the
changes.
Employee focus groups
Although representation from different
functions was important, it was also vital
to involve employees as we made the
changes. An initial step was to run
employee focus groups. Although we had
a fairly clear idea of the strategy we
wanted to implement at this stage, we
were looking for employees’ engagement
in that strategy. Of course, we did look
for feedback on any subtle changes.
We asked for volunteers to attend
the focus groups. This means you get a
mixture of people who have positive
and negative views, so it’s important to
get a good mixture of participants and
effective facilitation from HR. We
covered around 200 people, about one-
seventh of the working population. This
helped a “buzz” about the forthcoming
changes spread throughout CBS.
Employees knew where we were with
progress and had early alert of where
we were going. This way there were no
surprises when we started
communicating formally as employees
had been kept in the loop.
Launching formal communications
The actual launch phase lasted four
weeks and it was then that we
implemented our formal
communication plan. We really took a
“belt and braces” approach to
communicating the change and tried to
ensure all employees fully understood
what was changing and why.
The changes we made (see Figure 1,
above right) essentially freed up money
for flexible benefits by proposing four
C
ompanies that grow by acquisition
can experience a number of
difficulties in assimilating new
companies, not least a divergence in
employees’ terms and conditions. This
article describes how Centrica Business
Services (CBS) met this challenge by
involving employees in creating a new
total reward package that harmonized
reward across the organization.
CBS was founded in 2002 and grew
quickly through acquisitions. The most
high-profile acquisition was the ex-Enron
UK business. We soon found that we had
two distinct employee populations – ex-
Enron employees and ex-British Gas
Trading employees – who were doing
largely the same job but being rewarded
differently. Ex-Enron employees had a
very cash-oriented reward model which
reflected their old culture more than it
did Centrica’s. The ex-British Gas Trading
employees had more “old-fashioned”
terms and conditions.
The two sets of employees were
largely based in separate locations but
were aware of each other’s reward
packages. Both packages had pros and
Centrica Business Services employs 1,500
people in the UK. It sells the services of
Centrica’s constituent companies,
including British Gas, Centrica Energy and
One.Tel,to business customers.
CENTRICA
Changes to employees’ terms and conditions must be handled sensitively. Marc Bishop, head of reward and
recognition, explains how feedback and communication helped Centrica successfully harmonize its reward offering.
19096 SHRR run 30/6/05 3:01 pm Page 12
© Melcrum Publishing Ltd. 2005 For more information visit www.melcrum.com or e-mail info@melcrum.com
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