Orange revamps pay structure


Orange revamps pay structure

Telecoms company Orange has introduced a new reward structure in a bid to help the organisation become more agile and responsive to the market, as well as more cost efficient, according to a new case study published by e-reward.

Company profile

Name: Orange.

Employees: 11,000 in the UK, 200,000 worldwide in France Telecom.

Location: London and Bristol, with call centres throughout the UK.

Business activities: Telecommunications.

Interviewee: e-reward interviewed Orange’s director of reward and pensions in autumn 2006.

Work levels introduced

In 2005, Orange was facing increased competition and organisational challenges as mobile telephony, broadband and TV started to “converge”. But the rapid expansion of the company, which had led to growth in the number of reporting levels and pay structures, had resulted in an unwieldy structure which frustrated almost everyone.

A new director of reward and pensions, with experience in the retail sector, instigated an organisational restructure based on work levels, which focused on taking out unnecessary layers of management and ultimately saving head count and the costs associated with this.

Once the new organisational structure design had been approved, a new pay and grading structure was put in place, underpinned by and benchmarked against Watson Wyatt’s global grading system.

New pay structure

Unusually, organisation design and grades have been separated with no read across from work level to pay grade. This is because Orange employs many technical specialists with scarce skills who it does not wish to reward as managers.

The pay structure recognises both management and individual contributor (specialist/technical) roles, while the organisational structure recognises decision-making accountability.

What you will find in this 17-page report

Executive summary
Company profile - overview

Rapid growth - culture of plenty - frequent restructuring - changing business

What needed to change?
Multiplicity of salary structures - reporting levels - organisational redesign - grading and benefits structure - engaging employees

Organisational redesign based on work levels
Brian Dive’s work levels - separate reward structure

Work levels
Decision-making accountability - analysing jobs - organisational design tool

Bottom up analysis
“Probe” process - interviews - where jobs sat in terms of levels - operational and strategic roles

What Orange found
11 or 12 different reporting levels - key findings

The new structure
Principles - wrangles

What the new organisational structure was designed to do

Five “fundamental” levels - two streams - volume areas - specialist areas

Project methodology
PRINCE2 methodology - steering committee - programme board - project delivery team - consultation

Reward structure
Watson Wyatt’s global grading system - nine grades - dual career path

Performance management
Performance ratings - objectives - balanced scorecard - appraisals

Bonuses and benefits
Aligned with new nine-grade pay structure - new bonus scheme for customer services staff

Engagement themes

Local, national and European works council employee representatives.

A final word
Lessons learnt

List of boxes

1: Orange values
2: Orange’s timetable
3: Decision-making accountability: Brian Dive’s work levels and seven elements
4: Structure design and reporting lines
5: Implementation programme  - with an integrated approach
6: Orange grades - Global grade map

Want to know more?

Title: "Organisational redesign separate from new pay structure at Orange", research report no. 47.

Availability: The case study is published as part of an annual subscription (11 issues a year) to e-reward’s research report series. Visit the Research Report Zone to find out more.