Shaping a Positive Culture; Aligning HR and Sales

P R E S E N T E D I N A S S O C I AT I O N W I T H T H E H R W O R L D WWW.THEHRWORLD.CO.UK

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4. SHAPING A POSITIVE CULTURE; ALIGNING HR AND SALES

A R E S O U R C E M A N A G E M E N T W H I T E PA P E R • W W W . R E S O U R C E - M A N A G E M E N T . C O . U K

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ABOUT RESOURCE MANAGEMENT

ABOUT THE HR WORLD

RSG’s HR Networking Forum With forty years of experience, we are experts in the The HR World - Logotype

Launched in June 2014, The HR World is the premier

provision of RPO (Recruitment Process Outsourcing) and MSP (Managed Service Provider) solutions.

networking destination aimed exclusively at senior HR professionals and talent & resourcing professionals. It is a community for like-minded peers to sculpt the conversation surrounding HR best practice, attend quality networking

At Resource Management we pride ourselves on

events, contribute to respected thought leadership content

‘knowledge based recruitment’. We believe the

and build their profiles within the HR arena.

role of a resourcing partner is to add knowledge, market insight and thought leadership. Through our consultative approach, which is ‘high touch’ and supportive, our intellectual partnership led solutions are implemented and managed by real experts.

Our position of ‘trusted advisor’ is underpinned by a commitment to continuous improvement and evolution of our services to meet the business objectives of our clients.

We want our members to shape the direction The HR World takes by offering them the opportunity to discuss the most pressing topics, contribute to publications such as our white papers and attend exclusive networking events.

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CONTENTS 03 About Resource Management & About The HR World 05 Contents & Acknowledgements 07 Foreword - Steve Pratt, Interim HR Director, Swinton Insurance 08 The Sales Function; Making it HR’s Business 09 Sales Behaviour; Have We Gone Too Far? 10 Example Case; Extreme Compliance 12 Customer Experience & Customer Outcome 14 Cultural Enrichment, Not Change 16 The Vicious Cycle & The Virtuous Cycle 17 ‘A manager sets a fire under a person, a leader sets a fire within a person’ 18 Omnichannel Organisations 20 Recognition vs Reward 22 HR Case Study: Nationwide Building Society 25 Conclusion - Mike Beesley, CEO, RSG 26 Guest Profiles 29 Contact Details

ACKNOWLEDGEMENTS Resource Management and The HR World are very grateful to those individuals who gave their time to take part in The HR World Debate and who contributed to the content of this white paper. We give special thanks to Steve Pratt for leading the Debate.

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HAS ULTIMATE COMPLIANCE TAKEN THE FUN OUT OF SELLING?

07

FOREWORD

by Steve Pratt Interim HR Director Swinton Insurance

The HR World invited me to lead a round table discussion

Unfortunately, despite the focus on TCF, this vision has not

for a select assembly of senior HR professionals. I was

(yet) been fulfilled. The FCA’s attention has now spread to

delighted to share and explore with the invited guests my

all areas of FS: banks, asset management businesses, life

experiences as an Interim HR Director.

companies and general insurance businesses. This refocus on incentive schemes has been the catalyst for the recent

After the infamous mis-selling of PPI became the Financial

changes across the FS sector. The issues I therefore raised

Conduct Authority’s (FCA) main focus for review1 in January

at The HR World Debate centred on how previous incentive

2005, their subsequent exploration of what drives sales

schemes have driven poor sales behaviour to the detriment

malpractice has shaken the foundations of the Financial

of customers, and the practicality of the changes the FCA

Services (FS) world. Its goals, results, attitudes and drive

are now asking businesses to make. As businesses have

are under both legal and moral obligation to reinvent

responded by taking drastic steps to ensure that they are

themselves, making it impossible for them to operate as

compliant, that their incentive schemes drive the right

they once did. Following the FCA’s focus on sales practice,

behaviours and that they are customer-focused, I ask the

The HR World Debate centred around the effect the recent

question; have we, in our attempts at ultimate compliancy,

changes to incentive schemes have had on organisations.

taken the fun out of selling?

I wanted to explore with the Debate guests the impact of this focus, and how HR can support the transformation.

The selling of financial products is precarious by nature, and must be treated with great care. The consequences

In the past, the FCA (or the Financial Services Authority

of making an ill-advised choice or skimming over the

as they were known) primarily concerned themselves

fine print can be extremely difficult and timely to fix; it is

with treating customers fairly (TCF), and encouraged

therefore imperative that those selling them are deserving

businesses to incentivise their staff using ‘measures solely

of their customers’ trust. Many FS organisations may have

aimed at rewarding the fair treatment of customers’2. In

lost that trust, but if they adopt a new customer-centric

their 2006 Thematic Review, they outlined the value and

approach driven by HR and compliance, the damage may

necessity of ‘principles-based regulation’ ; of letting one’s

not be permanent. What is becoming increasingly apparent

conscience govern rather than succumbing to financial

is that it is largely the HR function’s responsibility to drive

motivation. They envisaged a world in which honourable

the change which will enable businesses to earn that trust

‘principles are themselves rules’ .

back.

3

4

1

Richard Evans. PPI: Timeline of the mis-selling scandal. Web: The Telegraph, May 2011.

2

FCA. Risks to customers from financial incentives – an update (Thematic Review TR14/4). London: Financial Conduct Authority, March 2014.

3

FCA. Treating customers fairly - towards fair outcomes for consumers. London: Financial Conduct Authority, July 2006. Page 5.

4

FCA. ibid. Page 5.

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THE SALES FUNCTION;

MAKING IT HR’S

BUSINESS

The HR World gathered together a collection of industry experts from a cross-section of businesses , eager to share their vast range of expertise and experience. The guests’ collective backgrounds were representative of the running of direct sales channels, the consultancy market and HR; all have had first-hand experience of the effects of the FCA’s intermediation. The experiences of the guests informed and shaped the discussion, demonstrating how their respective HR departments were affected by and responded to the changes. In this way, they offered high quality advice and insight into the potential HR has to become a big part of the sales function’s transformation.

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SALES BEHAVIOUR;

HAVE WE GONE TOO FAR? Sales teams are, of course, the product of a sales

The steps being taken by businesses in response to

culture; they cannot be blamed for the ethical errors

the FCA’s focus and fines may feel counter-intuitive

their environment generates. However, according

to business profitability, but are they also counter-

to author David Hibbard, along with the many

productive? Consider these new measures in place

customers who were mis-sold PPI, ‘the career of

at several FS organisations; the telephone scripts

selling [itself] becomes the victim’ . It is now HR’s

used by sales teams as guidance for customer calls

role, in partnership with compliance, to moderate

have been completely re-drafted into very compliant

and monitor the sales management behaviour which

pieces, fully informing customers of what is on offer

creates and maintains this environment. In many FS

with constant attention to their personal needs.

organisations, this is a completely new responsibility

If an employee does not use their script faithfully

for HR.

and effectively, they receive a ‘call fail’, after which

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incentive bonuses are suspended. What is unusual Hibbard suggested that the root of the problem can be

is that rewards are now being based mainly on how

found in training, writing that ‘salespeople emerge from

compliant their calls are, paying no attention to the

corporate training only to enter the game unprepared.

sales outcome. This is known as ‘goal displacement’,

The problem is they are held accountable as if they

prioritising the means above the ends, and this has

were prepared’ . When the FCA sent pre-interview

fundamentally transformed many sales functions.

questionnaires to FS organisations, it appeared that

Whilst it sounds initially like an excellent customer-

they too were far more focused on management than

centric approach, it appears to be resulting in an

on individual performance. A member of The HR

imbalance of compliance and sales. This approach

World Debate suggested that a review of “corporate

means that, as long as a call is compliant, sales

training departments” could determine if “the skills

employees do not have to sell; they could feasibly

being instructed correspond” to the salesperson’s

receive full remuneration for their compliance statistics

everyday challenges. Steve Pratt suggested that we

without making a single sale. David Ellis, National

need to “make management more accountable” for

Head of Reward Services at KPMG, explained that it

the incited behaviours of their teams. HR and the

is counter-intuitive to receive a bonus simply because

business must ensure that salespeople are properly

you haven’t mis-sold, comparable to “giving a doctor

trained, and ‘take advantage of the talent [they] have

a bonus for not killing someone”. So what is now

hired by teaching skills that are needed for success’ .

motivating sales executives to sell?

6

7

5

David Hibbard. Ethical Selling: Building a sales culture based upon social responsibility. Web: Huffington Post, April 2013.

6

David Hibbard. ibid.

7

David Hibbard. ibid.

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Example Case: A customer calls to renew their car insurance.

After reaching the appropriate consultant, the customer is then required to go through a huge number of compliance questions in order for the consultant to achieve 100% compliance to the FCA’s standards; this takes 45 minutes to complete.

The Result: customer satisfaction was minimal. Although the customer got what they called for in the end, this extreme process was frustrating for all parties.

EXTREME

COMPLIANCE

This approach has interestingly increased the retention rate for existing customers in many FS organisations (according to Debate leader Steve Pratt). For some, however, these overly-compliant preliminary measures are not enough to tempt new customers. There are simply too many hurdles for it to be an enjoyable process for either party. Upon hearing of the extremity of the car insurance call, guests of the Debate considered Steve Pratt’s suggestion that the fun has been taken out of selling. They agreed that rather than requiring flair and confidence as it once did, it now requires methodical boxticking and meticulous attention to detail, and potentially the need to recruit against a new set of competencies.

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Debate Response:

BECOMING MORE NATURAL Steve Pratt suggested that the approach to sales needs to “become more natural”. Someone who reads from a script is not an advisor; rather, sales consultants should speak for themselves, as one person to another. For example, during a compliance telephone conversation, a consultant should ensure that the customer understands what it is that they are trying to achieve.

Offering complete mutual knowledge of the motives of the call will “help the customer to own the conversation”8, and feel as though they are in no way ignorant of any aspect of the call. All customers appreciate corporate transparency. In the wake of the PPI scandal especially, you cannot sell anything that a customer does not want to buy. You can only offer a service in the hope that the quality of the product will speak for itself.

Debate Response:

CUSTOMER-CENTRIC PRODUCTS If FS organisations focused on creating the right product, what could follow is a higher standard of sales practice. Unfortunately, the skills of the sales-driven executives of pre-FCA organisations did not necessarily align with selling a quality product.

Instead, this new breed of ‘non-advice’ service advisor can align their people skills with a product which sells itself.

Both the FCA and HR focus heavily on transactions and processes, including the attitudes which accompany them. Should we therefore, asked guests of The HR World Debate, focus on product regulation, rather than process regulation? The guests agreed that if you have an excellent product, then theoretically no amount of poor selling practice can harm your customers.

However, the Debate guests suggested that some FS organisations still do not fully understand customer demand. Many did not design products which were tailored to their customer segmentation, trying to force and recycle products which were meant for a different target audience and time. So why are there so many varieties of financial products? A bank, for instance, only provides about half a dozen products in essence, yet these have been adulterated and diluted into so many different forms that of course this has resulted in confusion and mis-selling. On top of this, the guests realised that the number of incentive schemes multiplied unchecked; the gradual, stealthy nature of their progression was such that many businesses did not notice how many they had until it was too late. ‘Most incentive schemes involve selling or advising on multiple products or services’9, so when changing financial structures, the FCA suggests (and the guests agreed) that simplicity and consistency should be at the forefront of product creation.

8

Simon Leeming (HR Director, Virgin Money). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, London, 2014.

9

FCA. Risks to customers from financial incentives – an update (Thematic Review TR14/4). London: Financial Conduct Authority, March 2014. Page 27

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CUSTOMER EXPERIENCE &

CUSTOMER OUTCOME Any productive and trusted sales team must achieve both

The issue is maintaining a balance of priority, which is only

customer satisfaction and profitable sales. However, a

achievable if founded on the understanding that the two

sales environment in which customer experience and

are neither independent of nor incompatible with each

customer outcome are at odds is its own worst enemy.

other. Great customer satisfaction (should) inevitably result

This is reflected in The Telegraph’s findings that around

in a good customer outcome which, if not a sale, is an

£500m per month is being paid out to claimants of PPI

excellent piece of advice which makes the customer feel

compensation, a total of £13.4b to date . It cannot be

valued and listened to. Sales executives should remember

impossible to have both, but why have so many businesses

Dave Ulrich’s words when speaking to their customers;

got it wrong in the past? Is it down to a lack of belief or

‘listening is not that you understand, but that the other

faith in the correlation between customer satisfaction and

person feels understood’13, for their own benefit as well as

sales? Indeed only very recently (January 2012) was the

for their customers. The profitable benefits of becoming

‘first study to demonstrate the link between customer

more customer-centric are attainable if you take the time

satisfaction and business performance’11 published. The

to truly get to know your customer, and allow sales to be

Institute of Customer Service’s study ‘The missing link:

“a by-product of good customer experience”14. There is

How customer service drives sales and market share’

no sustainable advantage to chasing quick sales. It was

found that Amazon, ‘had the best customer satisfaction

agreed by the Debate guests that it is the longevity of

(91.7%) and achieved the strongest sales growth (20%)’12.

great customer experience that will earn an organisation

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continuous and renewed revenue, and that there is a balance between compliance and human interaction to be achieved.

10

Szu Ping Chan. PPI mis-selling claims ‘have yet to peak’. Web: The Telegraph, February 2014.

11

Leon Paternoster. The missing link: How customer service drives sales and market share. Web: Institute of Customer Service, February 2012

12

Leon Paternoster. ibid 2012

13

Dave Ulrich. 20 Insights on Organizations. Provo, Utah: The RBL Group, 2014. Print.

14

Nick Walrond (Managing Director, Resource Management). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, London, 2014.

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CUSTOMERS DO NOT WANT TO BE ‘RAILROADED INTO A DECISION’

Debate Response:

ETHICAL SELLING Whilst discussing non-advice sales within life and pension products, Alexandra Marsden, Head of Sales at Royal London, stated that we are “bound by a set of ethics” to make the customer feel like their interests are being prioritised. The consultant must empathise with the customer journey by putting their needs first, recognising that customers want and deserve “the opportunity to make choices through that journey”15. They do not want to feel “railroaded into a decision; a decision which would have eventually been made independently, had you given them more time and the opportunity to reflect and think things through”16. Sales consultants have no control over the pre-conceptions or the temperament of the customer, and only a limited control over the outcome of the call. They should therefore ensure that what they can control (their behaviour) is founded on this set of ethics.

The aim of these changes to sales and organisational behaviours is to instigate what the FCA called ‘a wider programme of cultural change to put the consumer at the heart of their business’17. Shifting the attitudes which fuel an organisation’s culture to a more customer-centric model is clearly what is needed, so what practical measures can be taken in order to make this change?

15

Nick Walrond (Managing Director, Resource Management). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, London, 2014.

16

Tim Donaghy (Head of Permanent Delivery, Resource Management). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, London,

2014.

17

FCA. Risks to customers from financial incentives – an update (Thematic Review TR14/4). London: Financial Conduct Authority, March 2014. Page 6.

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CULTURAL ENRICHMENT, NOT CHANGE The weight of the FCA’s focus and fines has resulted in

Throughout the Debate, host Steve Pratt encouraged the

significant positive change, but only in organisations which

idea of a more holistic approach to change rather than a

are large or secure enough to handle this ‘tough love’

radical transformation programme; a steady, maintainable

approach. For many smaller organisations it is too heavy a

model which primarily considers the bigger picture. Although

hand. The enormous cultural and structural shift expected

this could be considered ‘taking the long way round’, there

by the FCA has incited many FS organisations to radically

is in fact no such thing as a shortcut to sustainable success.

restructure their sales functions; a big change which will

The solution may be in its infancy, but is undeniably

likely have similarly big results. The emerging consensus

more effective to enrich your current culture, rather than

among the Debate guests was that this change is certainly

attempting a “big bang cultural change”19 by restructuring

required, but at a level corresponding to their means. The

the entire sales function from scratch. Over time, it will

gravity of the intervention has been too severe in some

require the gentle but firm re-educating of sales staff; we

cases, and some companies will not survive it.

need only to encourage the good attitudes which do in fact exist, but seem to have lain dormant. It will be an unavoidably

HR however, championing the human element of business,

slow and painful process, but so is the journey towards

is in a logical position to cushion and moderate the impact

anything worth having. It simply requires the right attitude.

of the FCA’s actions.

AVOID ATTEMPTING ‘BIG BANG CULTURAL CHANGE’

19

Steve Pratt (Interim HR Director, Swinton Insurance). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, London, 2014.

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Debate Response:

MULTIPLE CAREER PATHS HR departments hoping to come out of this transformation proud of the changes they have made need to consider, according to Kate Banks, Group HR Director at Brightside PLC, “what career paths you should have in place”, because at the root of this problem is recruiting individuals into team management roles when people skills are not their speciality. In many sales environments, the next career step for a sales executive is into team management, but those who aren’t natural leaders find themselves being recruited into these positions simply because this is the only career path in place. Therefore, in order to offer more opportunity, there needs to be an element of understanding in the conception of career paths, with multiple routes of promotion and progression. Without it, salespeople who do not have the instinct for people management end up doing something they weren’t trained or aren’t inclined to do. And here the vicious cycle begins. Below is an example of a career path model which reflects the different potential routes of promotion and progression discussed at the Debate.

TRADITIONAL FS SALES CAREER PATH MODEL

NEW CUSTOMER-CENTRIC FS SALES CAREER PATH MODEL

16

18

FCA. Risks to customers from financial incentives – an update (Thematic Review TR14/4). London: Financial Conduct Authority, March 2014. Page 13.

17

‘A MANAGER SETS A FIRE UNDER A PERSON,

A LEADER SETS A FIRE WITHIN A PERSON’

The relationship between leadership and management is

With the improvement of leadership capability, only those

a topic all but exhausted in HR forums, including The HR

with the essential management skills ought to be promoted

World’s previous Debates, but within lies a solution to the

to leadership roles, as opposed to all successful Sales

problem. As we know, it takes a combination of the two to

Executives.

first inspire and motivate, and then to support employees

can become less of a regulated process and more about

with consistent and wise supervision. If HR can “get the

relationships. This is becoming more firmly placed within

board on board”20 and align their values with customer-

HR’s domain; according to the CIPD, ‘HR professionals

centricity, then HR can drive the required cultural change

also have a role to play in measuring and monitoring how

from board level down. For instance, if HR and the board

effectively line managers deliver their people management

liaise to integrate inspirational leadership throughout the

responsibilities’21.

Subsequently,

performance

management

organisation this will have a direct and positive impact on sales teams. To do so they will need to ensure that

We need to both set the fire beneath, which drives

those managers who have the ability to inspire staff, foster

profitable sales, and pre-emptively counter the potentially

teamwork and lead by example are equipped with the skills

negative effects by setting the fire within to drive good

they need to lead the employee performance management

behaviours. It is a real leadership challenge to achieve a

process.

healthy balance between measuring sales and output effectively and accurately, whilst preserving trust and a feeling of empowerment amongst employees.

20

David Ellis (National Head of Reward Service, KPMG). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, London, 2014.

21

CIPD. Rewarding Work; The vital role of line managers. London: Chartered Institute of Personnel and Development, January 2007. Page 12

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A WELL ORGANISED OMNICHANNEL ORGANISATION IS A ‘CONTINUOUS EXPERIENCE ACROSS BRANDS, ACROSS FORMATS AND ACROSS DEVICES’

OMNICHANNEL ORGANISATIONS Pursuing their interest in new sales models, the guests

Although it may not always be feasible to speak to the same

discussed how many of their own companies and

person in all communications, an effective omnichannel

competitors within FS had, or were transforming into, an

organisation would have all your details and a history of

omnichannel organisation as a way of driving customer-

previous communications readily available to make the

centric behaviours. An omnichannel structure enables a

process as seamless as possible.

company’s customers to access their details and history in any branch, online, on the phone or via post.

Because of the transparency of communication, “the completely sales-driven invoice-chasers”23 cannot thrive in

A well orchestrated omnichannel organisation is ‘a

such an environment. The problem it presents them with

continuous experience across brands, across format and

however, is the sharing of customer details and history

across devices that is completely bespoke’ . It offers the

which, from a sales perspective, means that a consultant

customer fluidity of interaction, making it easy for them and

might lose a customer and their financial bonus to another

their individual needs to be aligned with the appropriate

consultant. Unfortunately, this also affects the ethical

consultant.

sellers. So, in order for an omnichannel organisation to be

22

successful, incentive and reward have to be considered.

22

CloudTags (2014) What is OmniChannel?, Available at: http://omnichannel.me/what-is-omnichannel/ (Accessed: June 2014).

23

Nick Walrond (Managing Director, Resource Management). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, London, 2014.

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Debate Response:

RAISING BASE PAY & LOWERING BONUSES HR has a big part to play in transforming an organisation

the range of holistic reward schemes such as improving

into an omnichannel structure. It was agreed at The HR

pension contribution and the overall package. According

World Debate that to optimise this approach, a new

to Kate Banks, “when you look at why employees stay

model is needed in which raising base pay and lowering

with companies, join companies or try to do their best

incentives will encourage the sharing of customers. This

for companies, it’s not because of how they’re paid; it’s

way, sharing customers cannot result in a loss of bonuses

the quality of the line manager, whether they have friends

and subsequently, motivation. Although consultants may

at work and non-monetary recognition”. Understanding

lose “the rush of getting a big bonus”24, the quality and

that money is far from the most important aspect of a job

agility of their customer service will improve. This can attract

demonstrates valuable long-term thinking, not the quick-

and retain customers, offering consultants the opportunity

fix extra cash bonuses which are difficult to see beyond.

to earn bonuses for their compliance, good service

This way, an ethical sales executive who puts customers

and as a result of their company’s increased revenue.

first should always exceed their benchmark value to the industry.

Another benefit of this approach is that employment packages can be developed accordingly, broadening

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The next step is to recognise and reward that behaviour.

Simon Leeming (HR Director – Reward, Virgin Money). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, London, 2014.

20

RECOGNITION VS

REWARD Once a positive culture has been created and sales teams

For the latter two, what has happened to nurturing

are displaying good behaviour, how do line managers

their sense of worth through genuine and spontaneous

and HR professionals reward and motivate this conduct?

appreciation? To what Nick Walrond, Managing Director at

Without some kind of genuine, touching recognition,

Resource Management, called “old fashioned incentives”?28

some employees have nothing to push them but ‘the

To be publicly recognised amongst your peers as a high

fear of consequence and the promise of reward’24. This

performer can be very reassuring, and encouraging this

is unsustainable, for ‘as soon as the fear is gone… or

can turn a person’s ego into an asset. By ‘rewarding staff in

the reward is already earned or seems unattainable, the

ways that aren’t formally recognised as part of the reward

motivation is gone’25. A good reward system must be able

strategy’, employees feel valued in a unique, personal

to adequately answer the questions ‘why join?’, ‘why

way. What if excellent performance earned ‘a symbolic

stay?’ and ‘why bother?’’ . With this in mind, how do we

gesture’29 such as verbal praise, or a personal ‘thank you’

solve The Puzzle of Motivation?

from the CEO?

According to the CIPD in their 2007 report, there is an

In the pursuit of balance, managers must therefore juggle

undeniable ‘need for different types of HR’, just as there

reward and recognition which, together, can instigate ideal

is a need for different types of rewards ‘for different types

results from a sales team. Rewards are external factors,

of employees’27. Both sales leaders and HR departments

such as starting salaries and bonus payments. Recognition

must know their sales teams just as comprehensively as

is the personal touch, rewarding good behaviour in such a

they know their customers. Understanding what motivates

way that ‘the symbolic value exceeds the cash incentive’30.

each individual is key; some may be purely money-

Recognition could be, for instance, having a coffee the way

motivated, some may be looking for heartfelt recognition,

they like it waiting for them in the morning, or a promotion

and some may seek no recognition at all, content in the

which is ‘merit-driven rather than vacancy-driven’31.

26

knowledge that they serve their customers to the best of their ability.

24

PFPS. There are two ways to light a fire. Web: California: People First Productivity Solutions, March 2013.

25

PFPS. ibid.

26

CIPD. Rewarding Work; The vital role of line managers. London: Chartered Institute of Personnel and Development, January 2007. Page 5.

27

CIPD. ibid, Page 6.

28

Nick Walrond (Managing Director, Resource Management). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, London, 2014.

29

CIPD. Rewarding Work; The vital role of line managers. London: Chartered Institute of Personnel and Development, January 2007. Print.

30

CIPD. ibid.

31

CIPD. ibid.

21

Recognition is often an underestimated tool in the line

However, it is not just the high achievers who are deserving

manager’s arsenal. In a CIPD study, it was discovered that

of recognition. Noticing the little things that employees

all managers ‘recognised the need to do this, but most

do each day, and regularly doing little things for your

admitted to not doing it enough’32. However, by offering

employees creates a healthy, symbiotic relationship.

something like development training, for instance line

Rewarding only great achievements devalues their day-

managers can ‘help develop a sense of job security’ for

to-day efforts. It makes economic sense to reward only

their employees.

great achievements, but logical sense to encourage the

33

behaviours which lead to them.

Rewards are the results of obligatory schemes and business strategies, but it takes a real selflessness to remember to

Though the guests of The HR World Debate unanimously

offer recognition frequently and wholeheartedly. If cultural

agreed that this approach was extremely valuable, Steve

change becomes a reality, then this attitude should emerge

Pratt’s opinion was that recognition “does not and cannot

with it.

replace financial reward” entirely. As always, it is about balance.

editor’s comment:

THE PUZZLE OF MOTIVATION As depicted in The HR World’s previous white paper ‘The

The reason reward and punishment methods do not always

Puzzle of Motivation’, Professor Dan Pink discovered that in

work is because people like to be treated as adults; an

tasks involving solely formulaic processes and mechanical

employee who cares intrinsically about their performance

skill, financial incentives work as would be expected;

will have the autonomy to punish themselves when they

more money equates to better performance. But for tasks

don’t perform as well as they could, which is motivation

requiring even basic cognitive skill, monetary rewards

enough to make them want to do better. The puzzle of

actually lead to poorer performance. This flies in the face

motivation is no mystery once you have identified the

of so many economic assumptions, but the way to reward

pieces. Dan Pink identified these pieces to be purpose,

conceptual, creative thinking is to match it with equally

autonomy and mastery; the freedom to feel valued, to self-

innovative reward schemes. It is basic human nature to

govern and to improve one’s skill set are the key elements

crave intellectual stimulation, but the idea of ‘carrot and

driving a motivated employee.

stick’ motivation assumes that our instincts are no more sophisticated than an animal’s.

32

CIPD. Rewarding Work; The vital role of line managers. London: Chartered Institute of Personnel and Development, January 2007. Page 9.

33

Dave Ulrich. 20 Insights on Organizations. Provo, Utah: The RBL Group, 2014. Print.

22

HR Case Study:

NATIONWIDE BUILDING SOCIETY ‘Doing the right thing’ for our customers and employees

The project team had four clear objectives to deliver new

has always been at the heart of the culture at Nationwide.

bonus and incentive arrangements for all frontline staff

Therefore when the Financial Conduct Authority (FCA)

which:

highlighted their concern about bonus and incentive schemes across the financial services industry, Nationwide

1.

Were

completely

customer-centric

and

rewarded

was keen to both lead and champion a new approach

employees for whole job performance as opposed to

which had the customer at its heart and which continued

individual targets.

to reward for success, not failure.

2.

Our journey was one of evolution, not revolution. The

Were competitive, fair and transparent in order to attract and retain high quality employees.

Society already had a strong pay policy and framework which was consistent with the industry and enabled us to

3.

motivate, reward and retain our employees to deliver value

Aligned to existing reward mechanism/principles across the Nationwide Group.

for our members.

4.

Fully satisfied the requirements of the regulator.

A cross-functional team was therefore established, including key head office stakeholders, front line employees

From the outset it was clear that this was not simply about

and representatives from the Nationwide Group Staff

coming up with a new mechanism for rewarding our front

Union.

line employees. Neither was it about complying with the

‘DOING THE RIGHT THING’ FOR OUR CUSTOMERS AND EMPLOYEES HAS ALWAYS BEEN AT THE HEART OF THE CULTURE AT NATIONWIDE

23

minimum standards set by the regulator. We saw this as

Like others in the sector, we had our fair share of challenges

very much an opportunity to continue to put our customers

but, as the deadline of the 1st April came, we were ready

first and re-enforce our principles of mutuality.

to launch. Whilst we have continued to perfect our original design principles, I am confident that we can look back

We therefore embarked upon a cultural change programme

and be extremely proud of the transformation we have

for providing excellent customer service as well our mutual

achieved.

values, which are key to the way we operate as a business.

We were also aware that, to gain the acceptance of

In 2014, not only did we achieve this ambitious change,

employees, this change would need to be led at a local

the Society also achieved record volumes of business and

level, so from the outset we quickly involved our Area

profitability, and recognised customer service. In addition

Management teams, giving them the appropriate tools and

to this both staff engagement and enablement scores are

communication material to effect the required change.

now at a record high and staff turnover in all areas of our business has reduced.

In

response,

we

simplified

our

performance

pay

arrangements, ensuring that the performance measures

I am sure that our reward schemes will continue to evolve

were focused even more directly on those areas which

over the coming years, but for now we appear to have

benefited our members most. We also took the opportunity

satisfied our employees, the regulator, and most importantly

to both strengthen our governance and control processes

have achieved the right outcome for all our members.

which were key if the new schemes were to work effectively.

TO GAIN EMPLOYEE ACCEPTANCE, CHANGES TO OUR BONUS AND INCENTIVE ARRANGEMENTS HAD TO TAKE PLACE AT A LOCAL LEVEL We would like to thank to Craig Pocock, Head of HR at Nationwide, for providing the case study on Nationwide’s recent cultural change programme delivering new bonus and incentive arrangements.

24

WE MUST CULTIVATE OUR ABILITY TO SEE IN NEW LIGHTS, TO SEE THE STRUCTURE OF SALES FUNCTIONS AND INCENTIVE SCHEMES AS REWORKABLE RATHER THAN AS A SOLID FORMULA

25

CONCLUSION

by Mike Beesley CEO, RSG

The HR World Debate concluded that FCA intervention is

Their motivation comes from the recognition of delivering

certainly needed in some areas and that HR departments

a great service. In retrospect, if HR had been consulted

need to put themselves in a position, along with the

or allowed to shape the sales organisation from the start,

compliance function, to moderate and drive change.

perhaps the FCA’s focus on some organisations could

The world of Financial Services is in need of a balance

have been avoided. Therefore, with the positive changes

of external regulation and interpretive guidance which

now taking place in Financial Services (many being driven

organisations may adapt to make applicable and valuable

by a commercial HR function), HR has certainly earned its

to themselves. On receiving this guidance, HR’s role will

right to a place at the board room table.

be to bring the sales function and the HR function into alignment in order to effectively apply it.

In fact, Eugenio Pirri, Vice President of People & Organisational

Development,

Dorchester

Collection,

Of course, business is business; it survives by selling its

believes that as ‘the conscience of the organisation’36, HR

products and services. But an exceptional business will

already has a seat at the table. It is just a matter of making

create a long-term plan to generate a virtuous cycle; as the

it count. We must, when approaching the conception of

FCA suggest, the answer lies in ‘putting the consumer at

an FCA-compliant Sales organisation, cultivate our ability

the heart of the business’ .

to see in new lights, to see both the structure of a sales

34

function and its incentive schemes as something to be To transform into a more customer-centric culture, HR

reworked rather than as a solid formula. The inability to

will need to intervene by creating incentive schemes (or

see how an object can be used for anything other than its

removing them altogether) which allow sales teams to be

primary function is what psychologist Karl Duncker called

themselves, within legislative guidelines. By “recruiting

‘functional fixedness’, and it is with the journey towards

the right people in the first place”35, with the right “mind-

customer-centricity that we will be able to surpass this

set and behaviours”, organisations will be full of talented

stagnant idea. A proactive and successful HR department

individuals who will be able to let their natural flair for sales

will reconsider the functional fixedness of the following;

and a great customer service experience do the work. With

incentive schemes, which when well designed can drive

such a sales team there is no need for extreme compliance

good behaviour; salespeople, who in their best incarnation

processes or target-driven incentive schemes.

are service advisors rather than scripted automatons; organisational structure, which will orbit around the customers’ needs; and HR itself, not only a valuable transactional function, but also a strategic, significant and versatile asset.

34

FCA. Risks to customers from financial incentives – an update (Thematic Review TR14/4). London: Financial Conduct Authority, March 2014. Print.

35

Kate Banks (Group HR Director, Brightside Group PLC). The FCA’s Focus on Incentive Schemes. Round table dinner, The HR World, 2014.

36

Eugenio Pirri. The ‘seat’ is already yours. Web: HR Magazine, August 2014.

26

GUEST PROFILES Steve Pratt, Interim HR Director, Swinton Insurance

Ben Corlett, Head of Human Resources, Openwork Ltd

Following graduation with a degree in Business Studies,

Ben is currently Head of HR at Openwork, having been

Steve spent the first few years of his career in HR with

promoted into the role in 2012. He began his HR career

NestlĂŠ and Ross Foods before moving into Electronics,

with Zurich Financial Services, initially as a Resourcing

initially with Plessey. He joined THORN EMI in 1990,

Consultant, then Employee Relations Consultant and

and held three HR Directors roles in different Divisions

finally International Mobility Consultant. Ben has an MA in

of THORN over the following years, finally becoming

Strategic Human Resource Management.

Managing Director of Thorn Business Communications. In 1999 he chose to become an Interim Manager, and has held a number of Interim HR Director roles over the last few years, latterly in Financial Services, including Direct Line, Swiftcover.com and Novia Financial plc. Steve joined Swinton as Interim HR Director in April 2013 to take a lead role in Swinton’s 1000 Transformation Programme, designed to re-structure and re-focus the business following a major strategic review. With the Transformation Programme more than halfway through, he has formulated a new HR Strategy and undertaken a fundamental restructure of the HR function to more closely align with that strategy and with the business.

Claire Davies, HR Director, International & Heritage Divisions, Friends Life As well as her postgraduate diploma in Human Resources Management, Claire has also studied Strategic Business Management with Harvard Business School. Claire is a Strategic International HR Director with a broad range of industry experience, contributing to business strategy and transformation. Accomplished in business and cultural transformation and associated Employee Engagement programmes, Claire specialises in HR Business Partnering, Executive Reward & Resourcing, International Business

Kate Banks, Group HR Director, Brightside Group Plc Kate is a highly experienced senior HR professional with a proven track record in developing and implementing people strategies in different environments and situations that drive business performance. She has tangible experience in cultural transformations, Mergers & Acquisitions (including TUPE) and Organisational Design, and has previously held senior HR roles at AXA, Invensys Rail and ING Direct UK.

Integrations, M&A and disposals activity. Claire joined Friends Life in 2011 as HR Director for Life & Pensions.

27

David Ellis, National Head of Reward Services, KPMG

Alexandra Marsden, Head of Sales, Royal London

David is a partner with KPMG in the United Kingdom

After beginning her career at NatWest Bank, Alexandra

and leads the Reward practice at the firm. His team

went on to develop a successful career with Aviva spanning

specialises in advising businesses on how to most

nine years, progressing from Senior Manager to Retail

effectively pay their executives, taking into account

Telephony Sales Manager, to Head of Retail & Partnerships

the needs of stakeholders, the current regulatory and

Telephony and finally Head of Sales. She recently joined

governance environment and the desire to effectively

Royal London to assist in the growth of their Direct to

link pay to the strategy of a business. While his areas

Consumer business. Alexandra specialises in leadership,

of expertise are in executive compensation and long-

change agility, coaching to achieve results, contact centre

term incentives, David works closely with clients on

strategy and delivery, and people and customer agenda to

the design, implementation and execution of all reward

drive brand advocacy.

strategies. David has more than 16 years of experience in consulting at board level across reward, expatriate tax and employment tax. Much of his experience has been gained in working with companies with a global dimension, addressing the challenge of making global

Kathleen Reeves, Interim Head of UK HR Function Services, KPMG

policy sit comfortably in a local marketplace. David is a frequent contributor to industry debate and regular

Kathleen has extensive background in HR leadership

speaker on reward issues. Prior to joining KPMG,

working in a variety of business environments including

David spent eight years as a partner in another major

manufacturing, retail and financial services. Graduating with

professional services firm, where he headed its national

an M.Sc in Human Resources, Kathleen has experience as

Human Capital team.

HR Director with Steelcase, American Express, RBS, FCA and ICAP and is currently in an interim role at KPMG.

Simon Leeming, HR Director – Reward, Virgin Money Simon has worked for Virgin Money for 20 years. He is responsible for effectively leading, managing and

Steve Taylor-Gooby, Managing Director, Towers Watson

contributing towards the design of a cost effective reward

Steve has over 25 years of experience in the insurance

strategy that maximises the contribution of all colleagues to

industry, both as a consultant with Towers Watson and as

support the delivery of the company’s business objectives.

a partner at the Resolution Group. Steve’s specialist skills

Prior to Virgin Money, Simon worked at Norwich Union and

include Mergers & Acquisitions, Company Reconstructions,

studied at Ashridge Business School.

Risk Management and Corporate Strategy. Steve also held a senior management role at Towers Watson, leading the Global Insurance Consulting and Software business from 2003 to 2011. Over his career he has helped many of the world’s leading multinationals from North America to Europe, South Africa and Asia.

29

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