Unilever Inc. pay for performance

Unilever is a global consumer products conglomerate with businesses on five continents. The organization spends on its workers, who in exchange owe their all to the organization. For its staff, Unilever uses flexible pay for success (individual bonus programs and equity options). The requirement is to achieve both corporate and individual goals. The reward scheme is set up so that workers get an 80 percent incentive based on business success and a 20% bonus based on individual results. The annual variable pay varies from 0% to 100% of an employee’s base salary. One-quarter of the salary is translated into business stock (Unilever 20-F, 2006). Since its implementation in 2006, the primary goal of the reward system has been to ensure employees, especially executive members, focus on creating value for the organization.

Unilever’s pay for performance program has brought a positive impact on motivation. Since the firm’s reward system focuses on individual and companywide performance, employees have been able to work in teams to ensure they meet targets. The company also runs development programs to equip employees with skills to handle work challenges and be effective decision-makers. Unilever has linked its reward systems to performance and employees are able to see that. Daft & Marcic (2016) asserts that this type of pay for performance is effective since it ties performance to behavior. Therefore, it has enhanced organization profitability and market share over the years.

Recommendations

As indicated above, 80% of the bonus is based on company performance and 20% on individual performance. Thus, a significant portion of the incentives is highly dependent on the firm meeting its financial objectives. Although the system is effective in enhancing performance, the supervisors, are tasked with measuring and passing judgment. personal performance. Sims (2002) opines that the company should have employees conducting self-appraisal, so that they identify the areas of weakness and ways to improve rather than wait for their superiors to do the work.

References

Daft, R. L., & Marcic, D. (2016). Understanding management. Nelson Education.

Sims, R. R. (2002). Managing organizational behavior. Greenwood Publishing Group.

Unilever 20-F. (2006). Transition Report Pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934. Retrieved from: https://www.unilever.com/Images/ir_ara-2006-form-20f_tcm244-422269_en.pdf