Unilever uses variable pay to change managerial focus -- e-reward case study


Unilever uses variable pay to change managerial focus -- e-reward case study

Unilever has traditionally taken a long-term strategic approach to all aspects of running the organisation, including developing and rewarding managers as a central resource. But, as a new case study by e-reward.co.uk outlines, the nature of changes in the external market has meant that a more short-term focus has become appropriate.

This has involved recruiting more managers externally and this, together with the requirement to get managers to adopt shorter-term objectives, has resulted in a need to make their pay more competitive and responsive to performance. The company has introduced share options and variable pay for managers, and has refined the latter in the light of experience. It is also using total reward statements to help raise staff awareness of the value of their employment package.

And the approach to non-managerial pay has changed too. Traditional distinctions, especially where development is concerned, are diminishing as individual sites, who still control pay setting for this occupational group, find them outmoded. And common administrative systems encourage simplification and a degree of harmonisation of employment conditions and pay across the organisation.


Company profile: Unilever


200,000 worldwide, of whom 11,000 work in the UK.


Headquarters in London and Rotterdam, locations throughout the world.

Business activities

Unilever produces foodstuffs and personal care and cleaning products.

Web site



e-reward.co.uk interviewed Richard Silander in September 2004. Richard is Head of Employment Policy & Reward.





What you will find in this report

Page no.

In this case study, written and researched by e-reward.co.uk, we see how a traditional, devolved organisation has used its approach to reward to move from a long-term strategic focus to one which is more flexible and responsive to short-term challenges. Although this case study focuses on the 2,000-strong managerial population in the UK, Unilever's policies for rewarding managers are increasingly being extended down to the most junior jobs in the organisation.

Spread across 12 pages (4,300 words), this report examines the following issues:


Executive summary


Company profile -- overview -- what you will find in this report




Origins -- merger -- pressures for change


Approach to reward


Total reward -- long-term strategic approach -- short-term challenges -- pay stance -- pay below management level -- reward goals


The management resource


Development opportunities for managers -- short-term focus increases importance of cash


Work levels


Six work levels -- principles underlying work levels -- assigning jobs to work levels


Pay levels


Remuneration surveys


Pay progression


Performance and capability -- development of competencies and performance -- sustained high performers -- high potential -- management competencies


Variable pay and share options


Bonus scheme extended to all managers -- share options available to managers at head of department -- changes to bonuses




Flexing not high priority -- flexible car policy -- total reward statements


Pay for non-managerial staff


Devolved pay setting -- demarcations seen as inappropriate -- use of competencies




Demand for more personal recognition


Problems and lessons learnt


A final word


Appendix A


Sample total reward statement




Want to know more?

Title: Unilever uses variable pay to change managerial focus.

Issue no.: e-research no. 25.

Date: August/September 2004.

Pages: 12 (4,300 words) plus 6-page sample total reward statement.

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 12 October 2004