A rapidly expedited employee survey reveals high levels of dissatisfaction with the fact that there is no relationship between salaries earned and targets achieved. The answer is obvious: introduce a new incentives and benefits package across the board to answer these concerns. But this is a major initiative and ultimately the final decision will have to be taken at board level. So before you go to the board you will need first to gain the backing of individual directors probably through a series of one-to-one meetings with the chief executive, the finance director, the sales director and the IT director. How do you go about persuading them?
If ever there was a case for abandoning a one-size-fits-all philosophy in your communications style, this is it. Naturally all businesses vary in terms of the mix of employees and their relationship with management. You will no doubt feel you fully understand the nature of your business and how it shapes up against others in the sector and in the market generally. A new compensation and benefits package will have to take account of prevailing conditions in the labour market. And of course, if yours is a large concern, that will vary according to geography.
So there are external pressures and they simply have to be taken account of. Gaining acceptance internally may not be quite so straightforward. The key decision-makers you are seeking to influence are all very different. And they will expect you to have done your homework on a case-by-case basis. Some basic principles do apply. In planning for your one-to-one meetings, put yourself in the position of each in turn. Think about who these people are and what they might like to hear. Think not just about their professional disciplines but also their individual personalities. Remember you are seeking to gain information as well as influence.
If you can address the fears that may be uppermost in their minds youll be halfway there. As soon as they start speaking, sit back and listen. Address any immediate points they make and then return to your own agenda. Dont forget to tell them what you want them to do. They might agree to back your scheme on condition that you do something else on a if this, then that basis. You could respond, If we are able to make this adjustment to the scheme, will you be able to back it? Be very specific about what you want. That way you minimise the chance of surprises when you take it to the board.
So how should you go about selling your idea to the big four?
...to the CEO
If you dont get the chief executive on board your project wont fly its as simple as that. A CEO may want to know if you already have his other fellow board members signed up so it might be as well to make this meeting the last one. Alternatively, you may want to get a strong steer from the CEO in the initial stages to reduce the chances of being blown off course later by a powerful CEO who may force you to go once more round the track.A safe course of action might be to plan two meetings with the CEO: an initial conversation to share thoughts and brainstorm the issue with the objective of teasing out how he feels about it, while a second meeting at the end of the consultation period will ensure that you draw the threads together in a way more likely to gain the acceptance of the board. The chances are your CEO will be your best champion when you eventually seek board approval.
Good CEOs will want to see how your plans align with the business strategy and will obviously want to know about their impact on the bottom line. The durability of the new package will be an issue too. He will want reassurance that, once installed, the new compensation and incentive scheme will stand the test of time. Adrian von Hammerstein, president and CEO at Fujitsu Siemens, regards alignment with the com-panys strategic objectives as the first question an HR professional will need to address. His company is seeking to market a range of high-tech hardware solutions to business and consumer markets across Europe with all its diverse cultures. The workforce reflects those cultures and in trying to accommodate such diversity it would be very easy to lose sight of the companys strategic aim of maintaining testing financial returns in a
hardening market.
A second question, according to von Hammerstein, will be, How does the proposed plan look when compared with market practice? No CEO wants to find himself out on a limb with a compensation and incentives package which is out of kilter with what the industry is doing. There is a fine line between a company being regarded as innovative and groundbreaking and being stupidly over-generous. Of course there may be times when erring on the side of generosity is just what is required if, for example, you are struggling to attract the very best staff in a sellers employment market.
So identify what other key players in your market are doing and have some good answers ready on how your scheme will outperform them but only just. Of course the CEO will be interested in costs and, says von Hammerstein, the overall cost of the plan is a key figure. So be prepared to offer big picture figures rather than too much detail for various scenarios. If you go for a two-meeting strategy with your CEO its wise to try to identify some kind of acceptable global cost, remembering that cost-benefit ratio is what the board will be interested in.
For Belinda Earl, chief executive of Debenhams, alignment with corporate objectives is important and she echoes von Hammersteins views on benchmarking any scheme against the industry sector. Debenhams has tens of thousands of employees all of whom could walk quite literally down the road to the competition if the new package is perceived as being niggardly. However, even a fraction of a percentage point better than it needs to be will have a significant impact on profits. Accuracy is all, Earl points out, and you will need to show that your benchmarking is rather more than a finger in the air or sniff test. She would also like to see evidence of key indicators of success as well as milestones against which performance can be measured. And it is important that the package can be communicated simply to the staff so that it is easily understood, she stresses.
And finally, remember that the characteristics of decisive leaders tend to be towards the thinking and judging end of the spectrum, so ask questions along the lines of, What do you think? and Do you judge that to be the right idea? to check understanding and acceptance.
...to the finance director
While CEOs are usually extrovert characters, finance directors tend to be at the introspective end of the scale. They will look for detail lots of it. Be prepared
to produce examples of how the scheme might work in practice. Finance directors feel they must first seek to understand and then make their own mind up. Help them. Being finance people they will want clear evidence that a thorough cost-benefit analysis has been done.
B&Q finance director Duncan Tatton-Brown says he would want to be assured that the new package really did answer a genuine need. I would like to see that originally
agreed principles for remuneration are driving the proposed changes. For example, will the proposed package secure the best candidates by paying top end of the market packages or will it increase the proportion of reward payable, based on performance? He also stresses the need for the case for change to be unequivocal. I would want to see staff turnover evidence that the proposed change is necessary along with a benchmarking of salaries and how new recruit
packages contrast with those of existing staff.
Its important when dealing with financial directors to show workings out. In other words they will want the detail of how you arrived at your proposals.
Such a large amount of information would mean a pretty hefty presentation so remember that it is not necessary to include it all in any spoken communication. Rather you should give some of the headline messages in your presentation and have prepared written documentation to either leave with the financial director or for
discussion on request.
Above all, Tatton-Brown insists that he would not want to be presented with a fait accompli. Alternative proposals should be suggested and the pros and cons of each approach given to establish that the recommended approach is the best one.
So spell it out and remember the golden rule: never underestimate the intelligence of your audience, but dont overestimate their knowledge.
...to the sales director
Some would say the sales director has a thankless task. In many businesses his performance and that of his team is measured on a daily basis. The sales director will remember the days when he was a carefree young salesman responsible only for himself and his performance. Today he has to handle a bunch of mavericks who are just like he was 20 years ago. And its hard work. To persuade him, show him how his life will become easier as a result of your new package. Above all, dont threaten him. He has formidable power. Imagine him saying to the CEO, This new proposed package may be good for the rest of the staff but it will disincentivise my sales force. Your proposal will be toast.
This sentiment is reinforced by Martin James, sales and marketing director of retirement property managers Peverel. He has a regionally- based sales force covering the whole of the UK. His task is to keep them motivated against backgrounds of highly varying local market conditions. I would be worried about any incentives and benefits package presented as a blanket solution for the whole company, he says.
James points out that when it comes to sales, incentives packages can invariably be complex. In his own company his people have no less than three different types of bonuses. I would want to see evidence that any new scheme would allow me the flexibility to incentivise my sales force in the light of changing market conditions. The last thing I would want is a scheme which would cause more problems than it would solve or solve issues in one part of the company at the expense of another part. A sales force likes to know where it is and it is very easy to demotivate them.
Another issue too is his own bonus arrangements. At director level bonuses tend to be paid on the overall performance of the company. However directors are only human and they will want to see how higher performance from their staff can have an impact on their own pockets too.
For James communications is the key. I would like it clearly demonstrated to me that there is a clear plan to communicate the scheme to the workforce. Quite often it is when you start to consider the detail of how you might tell people about the new scheme that less obvious flaws become apparent.
...to the IT director
IT people often feel their function is treated as a cost rather than an investment. They can feel left out when it comes to incentives and benefits. One obvious way to make them feel included is to ask for their help in communicating the new package to staff. Perhaps the company intranet could be used or an online calculator system introduced so that each employee can see exactly where they stand at any one time. IT people will warm to that kind of involvement.
The key issue however will be to ensure that the IT department is not made the Cinderella of the new scheme, a point emphasised by Nigel Hall who has responsibility for IT within fashion retailer Arcadia. These days fashion retailing owes more to science than art, with the difference between success and failure turning on how quickly articles of rising fashion can be restocked and poor performers withdrawn from the shops. Sparkling management information systems are critical. Its little wonder then that IT people want their place in the sun too. According to Hall, When it comes to a new incentives package it is vital that all functions are treated equitably. So you have to consider how you are going to recognise performance in non-core areas.
Hall would also want the scheme to be easily administered: For the parts of the package that involve employee choice, the frequency of alteration should be minimised say, annually at time of salary review otherwise the costs can be huge.
Khalid Aziz is chairman of The
Aziz Corporation
