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."

Start your day with The Independent, sign up for daily news emails
Property
pets
Arts and Entertainment
tvGame of Thrones season 5 ep 4, review - WARNING: contains major spoiliers!
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Sport
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
News
Tiger Woods and Lindsey Vonn are breaking up after nearly three years together
peopleFormer couple announce separation in posts on their websites
Sport
football
Life and Style
Google celebrates Bartolomeo Cristofori's 360th birthday
techGoogle Doodle to the rescue
Arts and Entertainment
Haunted looks: Matthew Macfadyen and Timothy Spall star in ‘The Enfield Haunting’
tvThe Enfield Haunting, TV review
News
news
News
The Mattehorn stands reflected in Leisee lake near Sunnegga station on June 30, 2013 near Zermatt, Switzerland
news
ebooks
ebooksA celebration of British elections
  • Get to the point
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

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living