HOW UNILEVER CONSOLIDATES GLOBAL REWARDS

Compensation is the largest expense at most organizations. The internal processes for
establishing such rewards packages for employees—also consisting of benefits, pension, etc.—
are not only complex but also often inconsistent and even sometimes unfair. And for large or
international organizations, the processes are made more complex by varying regulations and
policies among different regions and cultures.
Both organizations and their employees are seeking compensation processes that are
transparent, fair, and motivating. And HR functions and human capital management (HCM)
professionals are seeking systems to manage these processes. HR needs a system to capture the
myriad rewards inputs, policies, and benefits and payroll concerns in order to provide strategic
benefits programs, payroll management, and compensation packages.
Netherlands-based Unilever has developed a system for consolidating global rewards data and
using this platform to drive employee rewards statements, forecasts, and strategic workforce
planning, as well as to provide critical analysis in strategic decision making and to ultimately
offer rewards packages that undeniably retain and engage talent.
Unilever Global Reward Director Nicola Wells, along with Conduent Senior Consultant Stuart
Smith, recently shared with APQC how the global organization reporting €54 billion Euros in
2017 revenue developed and leverages an enterprise-wide global rewards system.

THE SHIFT TO CONSOLIDATE REWARDS DATA

The totality of compensation data inputs is incredibly complex. Exceptions and inequalities
emerge that undermine the intended performance drivers that organizations aim for.
Consequently, HR is unable to tie compensation to performance. Shifting marketplace
conditions provide an additional complication. For many workers, the easiest way to get a better
salary is to find a new job. And the remaining workforce is disengaged from non-transparent
policies that don’t directly promotive productivity and creativity.
In short, global rewards is a neglected source for growth.
In response, large, multinational corporations are driving a trend to aggregate and analyze
rewards data in order to create more transparent, fairer compensation policies that can be
tracked for their return on investment. Unilever is one such example.

THE NEED FOR GLOBAL REWARDS DATA AT UNILEVER

Unilever has 165,000 employees working in 109 countries, which presents a complex network of
norms and locally managed compensation approaches. The second largest expense behind
advertising, global compensation accounts for €6.5 billion Euros of its budget.
“Unilever has faced these challenges,” said Wells. “Our employees constantly say reward can be
seen as a black box. We are trying to find the best people, and that goes hand in hand with

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 ensuring we can reward them in the way that they want. We have been searching for a solution
to keep the employee at the center and give them true transparency and some flexibility.”
Unilever has added more global structure to its previously diverse and disparate compensation
policies. Its first step was to aggregate payroll, benefits, and reward policies and understand at
the corporate level what’s happening in every region, as well as among third-party parties such
as pension providers and health care/life insurers. “We typically have got quite disparate
systems for HR, pension, and payroll,” said Wells. “We’re trying to really drive some incredible
opportunities by breaking those siloes down.”

A SYSTEM FOR CONSOLI DATING DATA

Global consolidation allows such large organizations to manage compensation on an enterprise-
wide scale. Moving beyond HRIS to manage this data is an opportunity to account for the
complexity of compensation across locations, systems, etc. Ideally the effort should provide
timely data, minimize manual processes, and provide specialized support.
A real-time rewards system needs these three key capabilities:
1. Digitalize policy—The system should record policies in a way that computers can
understand and ensure the core rules of policies are fully captured.
2. Integrate data—The system should identify the lowest common denominator data sources
required to produce reward data, as well as integrate with key HR systems.
3. Act as system of record—The system should put internally generated data online for easy
access and instill a standardized process for storing reward data.
This is different from traditional data warehousing efforts in that in pulls in only the policies
relevant to compensation from concerns such as social security, taxes, insurance, and other
employment costs that don’t directly surface in the salary. That is, the rewards consolidator
system aggregates pay scales, foreign exchange rates, bonus and incentive tables, etc. into an
accessible, centralized tool.
The end result for HR is the critical capability to calculate the total employment cost for any
employee, taking into account all the pertinent rules, company policies, and other
compensation inputs.
Unilever has long had the capability to report on staff costs while aggregating many factors such
as taxes and social security. But the organization developed a system in 2016 that could drill
down to the country level and even the individual level. “We need to genuinely see real-time
data and drill all the way to the bottom in terms of how much of that is paid on medical, on
salaries, by region, etc.,” said Wells. “We need to be able to cut and dice data at any time.”
A part-time team at Unilever took nine months to gather all rewards data sources, consolidate
relevant policies and regulations into a rules engine, and then launch a central database portal.

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 WHAT TO DO WITH GLOBAL REWARDS DATA
A real-time digital database of total rewards factors provides many opportunities for the HR
function to inform strategic decision making. With this data, HCM professionals can refine:
 workforce planning,  cost analytics,
 benchmarking,  policy planning,
 employee modeling,  compensation personalization,
 new-hire modeling,  business reporting, and
 international assignments,  employee engagement.

For example, Figure 1 details how the data inputs can feed employee rewards statements and
business reports.

Informing Reward Policies

Figure 1

“Because we’ve got all of the rules in the system, we can now at the press of a button do
workforce planning using the actual costs and see the financial impacts,” said Wells. “This
consolidation has enabled us to do a lot more analytics, scenario planning, and modeling from
the individual level to the organizational level.”
To perform modeling, HR feeds hypothetical data to the system in order to determine the most
valuable rewards packages. Smith said that Unilever is a particularly advanced example of such
rewards package modeling to determine where to place employees and what to offer.
“There are a lot of individual systems that do a little part of all of this, but they never bring it all
into a whole; so teams spend a long time pulling and analyzing data without seeing the whole
picture,” said Wells. “But this scenario modeling we’ve used for the last 18 months drove
insights for our rewards policy offering. We saw what benefits were costing more and what
people thought. Scenarios helped to then change our rewards policy.”

As a result, Unilever now has simplified compensation packages with more consistent salaries.
This has allowed HR to more flexibly respond to business needs, provide useful data to address
personnel requests, and attract/retain professionals.

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 “All the what-ifs that you can imagine that go into a company of our size changing some of its
reward policies at a global level, that’s made far simpler with being able to run multiple
scenarios because you’ve got the data all in one place,” said Wells. “Previously we would have
taken weeks to consolidate data and determine what we wanted to do. So the new system
really has freed us up to be able to make those much better, more strategic decisions.”

At Unilever, this data has driven improvements to its reward policies to zero in on real value for
employees. “It has allowed us to be much more agile with our decision making,” said Wells.

WHO BENEFITS
A system for consolidated rewards data provides a total costs model, rewards statements for
employees, and valuable analytics to drive strategic decision making. The potential is for all
stakeholders to benefit, as Figure 2 details.

Designed to Benefit All Stakeholders

Figure 2

By aggregating all pertinent rewards data in one system, Unilever has been able to create one
hub that serves all stakeholders. Neither the HRIS nor the payroll system, said Wells, created a
whole picture from which to make informed decisions.
“For many years, it was really difficult to give all of the benefits for different individuals,” said
Wells. In creating the new system, “we’ve tried to really focus on something that will future-
proof us so that we have that ability to create all the different modules that will serve each
stakeholder.”

Implementation of this system at Unilever has opened up levels of benefits, starting with
accessibility to data to all stakeholders. Next, the organization was able to increase efficiencies

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 by centralizing processes, automating the creation of compensation packages, and rationalizing
waste. Then, HR could make an impact by improving rewards, ensuring fairer distribution of
compensation, and providing greater flexibility in creating compensation packages. Finally, the
organization then saw an increase in effectiveness through optimized work structures, more
dynamic rewards, and the ability to experiment with rewards in scenarios and then at a regional
level and track the ROI.

“This is giving us data, automation, and modeling capability to make better decisions and really
start to make rewards within Unilever work for our employees and for our business,” said Wells.
“It has unlocked a lot of opportunity for us and our business. We’re still on the journey, and we
still see a lot more that we can achieve. But we have data to make those decisions.”

THE CHALLENGES
Like many efforts to aggregate data in order to standardize policies, a system for consolidated
rewards data requires a balancing act between allowing local flexibility and creating
organization-wide rigor and standards.
Unilever wants to benefit from a global platform that aggregates and analyzes data and provides
a central portal for all rewards information. Such centralization enables global reporting and
consistent analysis. But Unilever also wants to adapt to local needs and allow HR to configure to
any sublevel policy, including compliance with differing regulations at the country level. “I think
we struggled with this early on,” said Wells. “It’s finding that balancing act, and each
organization will have a slightly different happy medium.”
A central rewards system also requires a balancing act in terms of impact and feasibility. There
are many ways to break down the data, be it by region, demographics, functionality, or the type
of data (Figure 3). When developing such a system, organizations must weigh the potential
impact of the information with the feasibility in aggregating it. A high-impact topic can gain
support for further investment and data consolidation—if it’s reasonably feasible to aggregate.
“If your stakeholders are like mine, they want everything now, yesterday, and immediately,”
said Wells. “Because of the pressures of work, you don’t always step back and remember that
you can get the biggest wins by not doing all of it. We’ve had stuff on our backlog that has been
there 18 months to two years. We’re actually now starting to really focus on a better, agile
approach. It’s not only in how you develop a system but also how you run the whole project to
get that consolidation together.”

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 Impact vs. Feasibility

Figure 3

The final development challenge is balancing the system’s maintainability with the desired
richness of its outputs. Options include outsourced development, developing it as a software as
a service (Saas), or even just beginning with a simple spreadsheet for HR to maintain. Other
factors include the degree of communication (i.e., how many details are accessible) and the
degree of support for use and report generation. Smith shared Figure 4, which marks where
organizations typically fall of the spectrum of balancing these development considerations.

Richness vs. Maintainability

Figure 4

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 GOVERNANCE
Ultimately, such concerns are a matter of keeping stakeholders happy. Smith and Wells
discussed the importance of good governance in addressing any implementation challenges in
consolidating rewards data.

Typically, a large organization will have a governance board with representatives from each
stakeholder group, including HR generalists, benefits managers, data owners, and the global
system team (Figure 5). This board may help guide the effort in determining where to first focus,
as well as provide subject matter expertise. The governance board may also steer system
features and adoption incentives that help deliver rewards data and analysis to the right people
at the right time in the best order of priority.

Rewards Consolidation Governance

Figure 5

HOW REWARDS CONSOLIDATION SYSTEMS WILL MATURE

Moving forward, Smith anticipates organizations having increasing ease in digitizing and
accessing their rewards data. At the same time, the marketplace for rewards consolidation
systems will expand. Integration and aggregation, he said, will only become easier and faster as
organizations work to digitally integrate operations across the board.

At some point, Smith anticipates, organizations will have real-time access to marketplace
averages so that they can benchmark their compensation packages at any time. And the
consolidation of rewards data may streamline processes for many organizations. Micro-
administrators overseeing health care, life insurance, and pensions may be able to simplify
structures and combine roles, said Smith.

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 Unilever can now use its system for benchmarking, reporting, analytics, modeling, and rewards
package–building. “We built the system from scratch,” said Wells. “The big mountain to climb
was getting the data into the system. Now, we’re focused on maintenance, such as updating
benefits each year.”

Moving forward, Unilever will leverage its system to inform transformational improvements and
increased efficiency. Most immediately, the organization will link the rewards system to
financial planning tools for employees. “We particularly want to push a bit further and help
some of our blue-collar workers,” said Wells. “We want to be more flexible with their rewards
and what they need in terms of salary, pension, and even vacations.”

Although added flexibility may not work in every culture or in every part of an organization,
Wells said that organizations need to first compile their rewards data so that they can model the
true impact of such changes. Opportunities can’t be dismissed without first analyzing the data.
“Now that we’ve got the data,” she said, “we can start to make those choices much more
easily.”

ADDITIONAL RESOURCES
 How to Start the HR Digitalization Journey
 Exploring HR Process Automation Practices
 Key Human Capital Management Benchmarks: Reward and Retain Employees
 Rewards and Retention Practices: Cross-Industry Spotlight
 Reward and Retain Employees: A Summary of Best Practices

ABOUT APQC
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foremost authority in benchmarking, best practices, process and performance improvement,
and knowledge management. APQC’s unique structure as a member-based nonprofit makes it a
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leader in transforming organizations. Visit us at www.apqc.org, and learn how you can make
best practices your practices.

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