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."

people'It can last and it's terrifying'
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
footballStriker has moved on loan for the remainder of the season
footballFeaturing Bart Simpson
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
The five geckos were launched into space to find out about the effects of weightlessness on the creatures’ sex lives
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
ebooksAn unforgettable anthology of contemporary reportage
news Video - hailed as 'most original' since Benedict Cumberbatch's
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
Word master: Self holds up a copy of his novel ‘Umbrella’
booksUnlike 'talented mediocrity' George Orwell, you must approach this writer dictionary in hand
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

SQL DBA/Developer

£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering