Total reward and pay for performance drives GSK merger

CASE STUDY

Total reward and pay for performance drives GSK merger

A new case study published today by e-reward.co.uk shows how GlaxoSmithKline has used the opportunity presented by a merger to refocus its employees’ attention on both the need for and the rewards resulting from superior performance, and the value of the other benefits they receive.

Company profile

Employees:

22,000 in the UK, 100,000 worldwide.

Location:

Headquarters in the UK, operations based in the US and more than 100 other countries.

Business activities:

GlaxoSmithKline (GSK) is the UK’ s largest pharmaceutical company, which also produces over-the-counter medicines, oral care products and nutritional healthcare drinks. It has six divisions: consumer healthcare, pharmaceuticals, manufacturing, IT, R& D and corporate functions. GSK has 7% of the world’ s pharmaceutical market and annual sales of over £21 billion.

The company originated in a pharmacy established in London in 1715, and has come into being as the result of mergers between several pharmaceutical companies, principally Glaxo, Smith Kline, Wellcome and Beecham. The most recent merger -- between Glaxo Wellcome and SmithKline Beecham -- took place less than three years ago.

Web site:

www.gsk.com

Interviewee:

e-reward.co.uk interviewed Paul Craven, GSK's compensation director, R& D in September 2003.

Background

When Glaxo Wellcome and SmithKline Beecham merged to form GlaxoSmithKline at the end of 2000, the organisation adopted a new approach to reward. This stresses pay for performance and increases the proportion of pay "at risk" whilst creating and emphasising total reward. The company's TotalReward package contains:

  • Total Cash -- base pay, bonuses, and for managers, share options
  • Lifestyle benefits -- which include healthcare, dental care, family support, and employee assistance a corporate discount scheme a car scheme
  • Savings Choices -- a pension plan and two share schemes.

In addition the company puts resources into creating a pleasant work environment, providing development opportunities and encouraging work-life balance. The greatest challenge from a compensation and benefits perspective, it says, has been educating and communicating this new approach to all staff.

The complete package, the concept of which is based on employees understanding the total value of all the rewards they receive, not just the individual elements, is designed to attract, retain, motivate and develop the best talent. The proposition for employees is that TotalReward gives them the opportunity to share in the company’ s success, makes it easier to balance home and working life, and helps them to take care of themselves and their families.

What you will find in this report

Page no.

In this 18-page (5,800 words) case study, written and researched by e-reward.co.uk, we see an example of an organisation which has used the opportunity presented by a merger to refocus its employees' attention on both the need for and the rewards resulting from superior performance, and the value of the benefits they receive.

Topics covered include:

 

Executive summary

5

Total reward strategy

Paying for performance -- TotalReward

6

Total cash

Base salary -- competitor panel -- progression -- bonuses

7

Recognition

Motivating staff -- corporate framework

10

Lifestyle benefits

Total care -- holidays -- corporate discounts -- car scheme --

11

Savings choices

GSK's pension plan -- ShareReward -- ShareSave

13

Development

Online booking -- budgets

13

Communication

Wide range of methods -- total reward statements

13

Work-life balance

Flexible working -- programme of events

14

Problems and lessons learnt

Communication issues -- verdict -- final word

14

Appendix A

Document extract: recognition framework

15

List of boxes

 

Box 1: GSK's business strategy

6

Box 2: Salary clubs must watch out for competition or antitrust laws

8

Box 3: The role of the GSK remuneration committee

10

Want to know more?

Title: Total reward and pay for performance drives GSK merger.

Issue no.: e-research no. 15.

Date: October 2003.

Pages: 18 (5,800 words).

Availability: Published by e-reward.co.uk. Click on "Research Reports" on the left-hand navigation panel of the e-reward.co.uk web site and complete the simple online subscription form at www.e-reward-data.co.uk/content/ResearchReports.asp

For more details email: paul@e-reward.co.uk

Posted 21 October 2003