Total Rewards Leaders Meet at SAP: Digitisation, Transparency and Ratings Top the Agenda

ChapmanCG brought together the Total Rewards leaders’ community in Singapore again this month at an event that was co-hosted by SAP. A high calibre group made the journey on a Friday afternoon during a tropical monsoon, and we were pleased to have representatives from a broad range of organisations including Dentsu Aegis, eBay, Fonterra, Huntsman, ING, JP Morgan, Mead Johnson and UHG.

The Future of SAP

Chetna Singh, APJ Head of Total Rewards with multinational software company SAP, kicked off the proceedings with an introduction and some impressive insights into the workings and future vision of the SAP business. The presentation was both inspirational and exciting as we took an inside look at the high-tech, innovative cloud-based and digital world of the future. It was clear that SAP really does aim to make a difference in all of our lives and ‘help to run the world better’.

Digitisation

It was clear from the discussion that digitisation and how it will impact HR is a topic on everyone’s minds. The SAP team highlighted what Total Rewards can look like with a number of innovations that the company has implemented, and which are now being piloted. The first is a ‘success map,’ which sees the whole of the HR function run on Cloud technologies and is part of an end-to-end solution for integrated Talent Management. There are six modules that essentially incorporate the entire lifecycle of an employee. This all runs alongside ‘SAP Digital Boardroom’ and ‘SAP Cloud for Analytics’ — both groundbreaking virtual, on-demand platforms.

Finally, the SAP HR team has been incorporating ‘digital wellness’ with an initiative called FitSAP, which involves employees wearing a device that records and analyses health data. Starting in Singapore, with full rollout across Asia planned; there has been significant interest in the programme, and the benefits are already being seen across the company. The greatest success so far includes an employee with diabetes who has been able to stop taking medication. According to Yi Chiew Tai, Total Rewards PMO APJ, “At SAP, we have embarked on a journey towards digital wellness. FitSAP is the first of its kind of initiative that beautifully ties together our employees’ wellness, wearable health devices, and SAP’s leading-edge technology!”

Transparency

Is there clarity for all employees around pay structures and salaries? This was a question the group considered, as SAP highlighted their in-house ‘employee salary transparency’ model, which aims to demystify pay across the board and allows employees to see where they fit - and most importantly where they are headed in the future. Access to job family and salary ranges for each country is provided to all employees. Surely there was fallout and controversy when this information was shared? No issues have been reported, even from those at the bottom of the range. Knowing where you are — even if you are at the lower end — can provide an incentive to work harder and improve. It was also noted that the total value proposition is key and will include benefits, flexibility and growth opportunities, as opposed to just fixed compensation. The overall conclusion was that being clear and transparent on salaries should promote trust and engagement with employees.

Rewards Without Ratings

No topic seems to be more in the spotlight recently than performance management and the shift away from numerical ratings. With no shortage of commentary, articles, views, opinions and case study results, both good and bad; we seem to be at an interesting tipping point. There appears to be a clear divide in terms of companies who have removed ratings, those that are still deciding what to do, and those that have no plans to change the rating system at all. With this in mind, we thought it would be an appropriate time to view this topic through the lens of Total Rewards so we invited Tom Farmer, owner of consultancy Freelance Total Rewards, to lead an interactive session. We learned how some companies will manage rewards without a link to ratings, what some of the challenges will be, specifically in Asia, and what key enablers / barriers exist.

There was clear agreement that the role of managers is key - they must own the process and not see this simply as an ‘HR thing’. There was also definite acknowledgment that traditional performance management done badly can nourish short-term performance, but it can also build fear and damage team performance. Stack ranking of ratings, or forced distribution, can have a negative impact, and many firms have now taken away the bell curve and established new feedback mechanisms. SMART (Specific, Measureable, Attainable, Relevant and Timely) goals are being replaced with VART (vague and relative) ones, and there is a shift from sporadic to continuous dialogue with the primary focus being future mind-sets. But why is there such a distinct line some questioned? Why can’t it be possible to look at ratings for performance and have a growth mind-set as well? Why can’t you do both?

The Happy Medium

One company in attendance had been piloting a rewards programme, which is based on performance but does not utilise a traditional rating system. This organisation was still using the customary 9-box grid to rate employees’ contributions, but it had done away with the bell curve. They are currently twelve months into the programme and the initial signs are encouraging with both managers and employees reacting positively. This example seems to indicate that there it is possible to achieve a happy medium between rewards based solely on ratings, and doing away with ratings altogether.

The Rewards/ Ratings Journey

Overall, the ratings discussion was certainly highly charged, with the room split into those already well into the journey, those who have not yet started and some who have yet to be convinced that it is a journey worth taking. Whatever the decision, there are different routes to take and there is no one right answer for everyone. It will of course depend on the organisation, in terms of both business culture and context, and it will also vary from country to country. Tom Farmer outlined some differences in the willingness to accept a ‘no ratings’ system within APAC. His experience has been that it is fairly straightforward to change the system within ANZ, but China and Malaysia are more difficult, while SEA and Japan appear somewhere in the middle. If the decision is taken to do away with ratings, in order to have a successful experience and ultimately to achieve increased employee engagement, the organisation must be ready with robust change management and must not take the decision lightly. This means ensuring frequent, on going and future-focused performance conversations throughout the year, and also crucially utilising as much key data as possible, thus ensuring less bias in the process.

Thanks again to Chetna and her team at SAP, Tom Farmer and all who attended to make up such a valuable and insightful session. We look forward to bringing this group again together later in the year.

Here’s what people are saying:

“As always, great food for thought with a variety of perspectives and counterpoints shared. I left the meeting with renewed energy and focus to think more deeply about the perpetually challenging issues of effective performance management and rewards transparency.” - Jean Fung, APAC Head of Rewards Dentsu Aegis Network

“It was good to see how Rewards Transparency is taking shape in SAP. We can all learn from such a big step forward in driving Manager/Employee understanding of Market Pay Position.” - Jennifer Quek, Director, Total Rewards Asia, Pall Fil tration Pte Ltd

“The sharing of the practises/trends from our HR peers was insightful, as well as practical on how they introduce these trends in their companies. The mix of participants from across industries allowed me to compare and discuss our reward offerings and seek new ideas.” - Andre Lim, Regional Reward Lead, BAT

“As a C&B professional, ‘Rewards without Ratings’ opens up the opportunity for totally different thinking. I think you will start to see more and more organisations push to innovate in C&B and not be so constrained by 'following the market'." - Dan Randall, Regional Head of Rewards, Fonterra

“I find these meetings very insightful, especially as companies share best practices and there is always a healthy exchange of opinions like we did this round on 'rewards without ratings'.” - Sajjad Parmar, Regional Reward Partner, eBay

"Thanks Graham for organising the rewards session. I particularly liked the content of the sessions - focused on current and topical practices, that all of us need to discuss and learn from.” - Madhumita Banerjee, International C&B, APAC, Bank of America Merrill Lynch