Our remuneration models provide incentives for employees and managers to perform and to carry out their work in accordance with our guiding principles. Our systematic succession planning enables our skilled employees and managers to develop attractive careers within METRO GROUP.
Performance-based compensation for executives
Our PERFORM & REWARD remuneration system comprises a fixed monthly base salary and variable compensation components whose total is tied to our company’s business performance. The total amount of variable compensation is determined in part by the individual’s role in creating customer value and his or her efforts to practice the guiding principles of our company in their daily work.
The remuneration model for the approximately 600 top executives of METRO GROUP worldwide is based on the following four principles:
- Fair and consistent compensation
- Performance-based pay
- Market-driven and appropriate salaries
- Encouragement of role model behaviour
The primary elements of our remuneration model are the base salary, one-year variable compensation and multi-year variable compensation. As with the compensation of the Management Board, the first tranche of the new sustainable performance plan was allotted during the reporting period. We also introduced a green car policy during the reporting period, which, besides capping the CO2 emissions of the company’s vehicle fleet, also offers alternative mobility concepts. Unused funds in the car leasing budget can be converted into pension benefits. In addition, we provide our top executives with a company pension scheme that includes both contribution-based and performance-based components.
During the reporting period, we began to apply these remuneration principles to the compensation of other managers. Among other things, a specialist career model that also applies these principles is being developed for Germany. Plans also call for this prototype to be adapted and implemented internationally.
For more information about the remuneration system, see chapter 9 Remuneration report.
Performance reviews and succession planning
At METRO GROUP, systematic executive development is a central responsibility of the companies’ general management teams as well as of the strategic management holding company, METRO AG. By taking this approach, we ensure that the skills and abilities of our managers are consistently aligned with the requirements and strategic objectives of our company. It also allows us to systematically offer international career paths to our executives – regardless of the sales line or segment in which they work. Moreover, our career planning processes enable us to identify the right candidates for key positions in the company and to support them. As a result, we can fill vacancies from our own ranks. In the reporting period, the in-house succession rate for the senior management level – in particular the managing directors of group companies as well as divisional heads of METRO AG – was 88 per cent.
Individual job performance reviews
Once a year, we conduct an individual job performance review with our top managers as part of the RESULTS & GROWTH process. The objective of these reviews is to better measure progress and abilities as well as to create a culture of feedback that focuses on individual job performance and professional growth. At the beginning of each financial year, priorities are defined as a way of providing direction. These goals are reviewed during a half-yearly interview and modified when necessary. The job performance review is held at the end of each financial year. This meeting includes a feedback interview that covers both the achievement of priorities and observance of the guiding principles.
Systematic succession planning
As part of the Leadership Talent Review (LTR) process, succession planning is conducted for our core positions once a year. During this review, we examine the skills, abilities and experience of every potential succession candidate and rate these individuals according to the particular responsibilities of the positions. The process ensures that we identify and support suitable candidates for key positions at an early stage. During a subsequent professional development evaluation, employees and their supervisors jointly create a career development plan and determine targeted measures. As a result, the Leadership Talent Review acts as something more than a succession planning tool. It also serves as a long-term development process for our candidates for top positions in our company. This process is supported through other methods such as the development centre and 360-degree feedback meetings. These indicate the development potential each employee possesses.
With the goal of supporting the personal development of our employees, talented employees can be nominated for the development centre, where their strengths and areas for improvement are assessed. Based on this assessment, they are asked to create their own plan for development.
We select the candidates for the Excellence, Impact and Connect programmes for executive development according to the decisions made during the systematic succession planning process. Each of these programmes is designed to address the varying needs of the groups of participants. Some of the facilitators are members of our top management. We also bring in well-known international trainers in order to ensure that our instruction and discussions reflect the latest developments and case studies. These external partners include the Business School for the World (INSEAD) in France and Ashridge Business School in England. During the reporting period, more than 100 future and current managers took part in the programmes.
As part of the activities celebrating the 50th anniversary of METRO Cash & Carry, our sales line conducted the Crossing Borders initiative for the first time in 2014. This initiative is specifically designed for the managers of tomorrow. The 50 participants traded jobs for 50 days. Employees from the country headquarters, for example, worked in a store in another country in order to learn about operations there. Conversely, store employees gained insight into administrative work. This real-world change in perspective in a host country gave participants the opportunity to develop both personally and professionally.
Employee turnover rate
METRO GROUP turnover rate
During the reporting period, average job tenure rose by 0.5 years to 9.5 years. The group-wide turnover rate totalled 17.5 per cent (2012/13: 18.1 per cent). In Germany, the turnover rate was 8.6 per cent (2012/13: 7.7 per cent). Turnover rates varied widely according to region. The development of the fluctuation rates by region are shown in the graphic METRO GROUP turnover rate for comparison.