Remuneration models and succession planning
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 one-year as well as multi-year variable compensation components whose total amount is essentially tied to our company’s business performance. In addition, our one-year variable compensation considers individual achievements, the generation of customer value as well as the implementation of our management principles on the job. Among other things, the multi-year variable compensation incorporates a sustainability component.
The remuneration model for the approximately 600 top executives of METRO GROUP worldwide is based on the following four principles:
- Fair and internally consistent compensation
- Performance-based pay
- Market-driven and appropriate salaries
- Encouragement of role model behaviour
METRO GROUP further developed its remuneration system during the reporting period to underscore its sustainability standard. We maintained the fundamental principles for the one-year variable compensation. Based on this existing framework, we stipulated customer satisfaction as a key performance indicator for top executives of METRO Cash & Carry. The following applies to the multi-year variable compensation: this was further developed and subsequently launched in line with the remuneration of the Management Board as part of the sustainable performance plan version 2014 for top executives of the group. In accordance with the Green Car Policy introduced in financial year 2013/14, the CO2 emissions of the company car fleet were also limited at the international level. Furthermore, there is a possibility that the unused leasing budget for cars can be converted into pension expenses. 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. Furthermore, a specialist career model was introduced for the METRO AG management holding company which is also based on these principles. This model is being adapted at the international level and is already being practised in some of the country organisations. Apart from remuneration, it also contains employee development programmes.
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 company in which they work. Moreover, our career planning processes enable us to identify and support suitable candidates for key positions in the company. 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 88.3 per cent.
Individual job performance reviews
Once a year, we conduct an individual job performance review with our 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 personal development. Priorities are defined for this at the beginning of every financial year; these can be re-examined and adjusted if necessary as part of a mid-year performance review. The job performance review is held at the end of each financial year. It focuses on the realisation of priorities and adherence to leadership principles as well as the respective employee’s role-specific performance.
In financial year 2014/15, Media-Saturn introduced the new competence model “Passion for the Customer” and successfully established it in all countries in which the sales line operates. The aim of the model is primarily to support the focus on customer centricity and individual performance assessment.
Systematic succession planning
As part of the Leadership Talent Review (LTR) process, succession planning is conducted for our key 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 their respective positions. The process ensures that we identify and support suitable candidates for key positions at an early stage. Working together, employees and their supervisors then create a career development plan and determine targeted measures. As a result, the Leadership Talent Review serves as a long-term development process for candidates for top positions in our company. This process is supported through other methods such as the development centre and 360-degree feedback meetings.
Media-Saturn expanded its annual feedback sessions with executives to include the issue of succession planning. Based on the results of the sessions, employees receive, for example, the opportunity to participate in further training measures as well as in global development programmes.
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 development plan.
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, among others, the Business School for the World (INSEAD) in France and Ashridge Business School in England. During the reporting period, about 200 future and current managers took part in these programmes.
Pushing ahead with the group-wide focus on sustainability, METRO GROUP conducted the METRO Sustainable Leadership Programme for young managers for the first time in financial year 2014/15. In the context of this programme, 24 international participants completed a cycle that resulted in the development of sustainable in-house projects.
During the reporting period, the Crossing Borders initiative, which is specifically aimed at young executives, was conducted for the second time. In the process, 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 practice-oriented 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 to 8.9 years (2013/14: 8.7 years). Turnover rates varied widely according to region. The development of the fluctuation rates by region is shown in the graphic for comparison.