Finance: Bass leads the pay revolution

BASS IS widely acknowledged to be one of Britain's most successful brewing, pubs and hotels companies. Last week the firm chaired by Sir Ian Prosser reported a 17 per cent rise in half-year operating profits.

Within the Bass Brewers subsidiary - the unit that includes such brands as Carling Black Label and Caffrey's and created in response to the 1989 Beer Orders separating pubs and brewing interests - much of the success is attributed to a reorganisation designed to put the business at the forefront of a sector suddenly subjected to greater competition.

The management initiated a programme of radical structural and cultural changes in the early 1990s, then introduced a pay policy aimed at encouraging changes through improving organisational capabilities and performance.

Stephen Kear, the human resources manager responsible for performance management, the "radical shift from a traditional, hierarchical regional brewer to a national leader required us to align individual performance more effectively with corporate objectives".

Nor is he alone in claiming that "pay and performance mechanisms underpin the corporate change programme and are resulting in greater individual effectiveness and profitability". The Bass case is compared with others in studies for the report Strategic Compensation, by the research organisation Business Intelligence.

The report noted that two-thirds of organisations it questioned had re- thought, re-designed or introduced new pay, incentives and benefits mechanisms in the past two years, and there is almost universal agreement that such initiatives would greatly improve organisational effectiveness. The main benefits are seen as aligning individual performance with corporate objectives, retaining key people, recognition by employees that rewards are fair, higher levels of motivation and morale, attracting high-calibre recruits and differentiating between high, average and low performers.

Unilever, producer of household goods such as washing powder and foods like margarine has practised performance-related pay for 30 years and believes it will continue to be an important part of its management approach. But, according to the Business Intelligence report, it rethought how it compensated its 20,000 managers as a result of a board initiative in 1994.

Brian Dive, senior vice-president responsible for remuneration, explains that the change of policy resulted from Unilever - in common with other companies - having difficulty matching the theory and the practice of performance-related pay. "We discovered little differentiation for performance between the best and rest," he says. "Perhaps more disconcertingly, relatively young managers with the greatest potential were being paid less on average in their respective grades than those without potential." In addition, overlapping pay scales meant older subordinates could be paid more than a younger boss, and the structure of grades meant even the most talented managers had to spend 10 years moving through pay grades before reaching the maximum.

Executives realised, too, that the problem went beyond remuneration. It involved the wider issues of evaluating work and managing managers more effectively, set against the twin outcomes of achieving a business performance that satisfied stakeholders and an individual's needs for both personal and professional development.

The result was the replacement of 17 management grades with a work level model based on six different types of management work, ranging from operational to the strategic. Based on the quality of decision-making, it provided the framework for "broadband rewards".

Unilever says this "integrated approach" links human resources work in organisational design, reward management, performance pay, individual development and career planning. "In effect, we are able to say to managers, `Here's the work and a competitive pay rate, plus a competencies model which will help you prepare for moving to a higher level'," says Mr Dive.

Of course, there is no simple fix. Bass Brewers took a phased implementation approach, with separate performance review and pay systems being replaced by competency-based and variable pay before 17 grades were converted into five broad bands. Since the new reward policy came into effect in 1995 it has continually evolved in order to be more effective and to respond to new business needs.

As Bass's Mr Kear says: "There is no perfect answer in performance and reward management since systems have to evolve continuously. New priorities always seem to appear and it is more difficult to change when things are working reasonably well. In the spirit of continuous improvement, we thought we could be better."

Sport
File photo of Lewis Hamilton celebrating becoming World Champion after victory in the 2014 Abu Dhabi Grand Prix as he was made favourite to become the first motor racing winner of Sports Personality of the Year since Damon Hill
sportGareth Bale, Carl Froch and Kelly Gallagher also in the mix for award
News
Japan's Suntory Beverage & Food has bought GlaxoSmithKline's Lucozade and Ribena
news
News
A tongue-eating louse (not the one Mr Poli found)
newsParasitic louse appeared inside unfilleted sea bass
News
The illusionist believes hypnotism helped him to deal with the lack of control he felt growing up
people'It’s not that people react badly to it – they really don't care'
PROMOTED VIDEO
News
peopleJack Monroe accuses David Cameron of 'misty-eyed rhetoric'
News
Tana Ramsay gave evidence in a legal action in which her husband, Gordon, is accusing her father, Christopher Hutcheson, of using a ghost writer machine to “forge” his signature
peopleTana Ramsay said alleged discovery was 'extremely distressing'
Arts and Entertainment
Robin Windsor and Aljaz Skorjanec rehearse their same-sex dance together on Strictly Come Dancing
TV
News
ebooksNow available in paperback
Money
Anyone over the age of 40 seeking a loan with a standard term of 25 years will be borrowing beyond a normal retirement age of 65, and is liable to find their options restricted
propertyAnd it's even worse if you're 40
Arts and Entertainment
Perhaps longest awaited is the adaptation of Jack Kerouac’s On the Road with Brazil’s Walter Salles directing and Sam Riley, Kristen Stewart and Viggo Mortensen as the Beat-era outsiders
books
Arts and Entertainment
theatreSinger to join cast of his Broadway show after The Last Ship flounders at the box office
Life and Style
fashion'To start singing with Pharrell is not that bad, no?'
News
news
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Argyll Scott International: Risk Assurance Manager

Negotiable: Argyll Scott International: Hi All, I'm currently recruiting for t...

Argyll Scott International: Business Analyst - MGA - London Market - Insurance Broker

£50000 - £60000 per annum + benefits: Argyll Scott International: A Business A...

Ashdown Group: PR, Marketing & Events Executive - Southwark, London - £35,000

£30000 - £35000 per annum + benefits: Ashdown Group: PR Marketing & Events Exe...

Selby Jennings: C++ Developer – Hedge Fund – New York

$80000 - $110000 per annum, Benefits: Bonus and Employee Investment Scheme: Se...

Day In a Page

In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran
The young are the new poor: A third of young people pushed into poverty

The young are the new poor

Sharp increase in the number of under-25s living in poverty
Greens on the march: ‘We could be on the edge of something very big’

Greens on the march

‘We could be on the edge of something very big’
Revealed: the case against Bill Cosby - through the stories of his accusers

Revealed: the case against Bill Cosby

Through the stories of his accusers
Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

The Meaning of Mongol

Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible