Unilever uses dynamic total reward statements (TRS) and a reward survey system to create a database that is used to develop its reward strategies.
Peter Newhouse, head of global reward at Unilever, says: “It is probably the biggest database of its kind anywhere. This is ‘always-on’ feedback.”
It is now used in more than 100 countries, covering about 15,000 management staff. Unilever is currently extending it to white-collar non-management staff, with about 44,000 people now included. “The ambition is to stretch it to everybody,” says Newhouse.
“What we have done [with the TRS] is create something that is more dynamic, so the rules of the calculation are held in our total reward system.
“We can therefore generate TRS dynamically at any time. And they are updated, so if someone moves position, gets a pay increase or changes job, the TRS updates all that kind of stuff.”
The TRS is linked with a survey system from Silverman Research, called Rate My Reward, which is configured to ask staff about every element of their remuneration package, and pose questions around advocacy (for example, Would you speak highly about your reward at Unilever without being asked?).
“So we can build up a picture of what people feel about their reward package,” says Newhouse. “Because it is fed off the TRS system, all the questions are relevant to their own package.”
The feedback goes into reward development plans, which have six dimensions:
- How money is spent on reward. Unilever spends more than €6 billion a year on reward, its second largest expenditure. The system shows how much goes on fixed pay, variable pay, benefits, cars, and so on. The categorisation is common across all countries. “We can analyse for every country, for every segment, how we spend our money on reward,” says Newhouse.
- How staff feel about their reward.
- Unilever uses it to benchmark itself against the market. Is it high? Low? Where is it weak, or strong?
- Employee engagement results.
- It looks at philosophy. Newhouse says: “We say, just because a reward element might not be popular, it doesn’t mean we are not going to do it. It may mean we need to communicate more effectively, it does not mean we will necessarily abandon it. But is it useful to see what it looks like from the receiving end, not just from our point of view.”
- Most importantly, business results.
Newhouse adds: “The intention would be to take those six inputs and try to work to some optimum balance,” says Newhouse. “We say, if we tilt the reward proposition in these kinds of ways and we are aligned to the market in this kind of way, and our philosophy is aligned like this and our general engagement is like that and the business results are improving, then we must have got something right. We must have got an optimum mix.
“So, for the first time, what we are trying to do, which is different from the way reward is normally approached, is that we are trying to steer the entire reward proposition with employee feedback and insight as a real conscious driver.
“My philosophy is that if I am spending a euro on pay that is not valued, then I am wasting that euro. I am not getting impact for that euro. But if it is valued, I am getting more than a euro’s worth of value out of it.”