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 500 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
In the reporting period, the focus of METRO GROUP’s remuneration system continued to be on sustainability. Since financial year 2014/15, customer satisfaction has been a relevant performance indicator that METRO Cash & Carry uses as a key figure to determine annual variable remuneration for the executives. As part of the multi-year variable remuneration (long-term incentive, LTI), METRO GROUP’s top executives are still entitled to participate in the sustainable performance plan version 2014, just as members of the Management Board are. Deviating from this, a new LTI based specifically on METRO Cash & Carry’s new organisational model – whose focus is on value creation – was developed and granted to METRO Cash & Carry’s executives. The key indicator of sustainability is used in both plans as a binding element. Within the framework of METRO GROUP’s Green Car Policy, the carbon emission limits were lowered in the bonus-malus system, while plug-in, hybrid and electric vehicles were allowed as company cars. Furthermore, the unused leasing budget for cars can continue to be converted into pension expenses in Germany. In addition, we provide our executives with a company pension scheme that includes both contribution-based and performance-based components.
In financial year 2015/16, we began to apply these remuneration principles to the compensation of other groups of employees. Within the management holding company METRO AG, we began to apply them in the context of the specialist career model introduced in 2015. In financial year 2015/16, we continued the systematic roll-out of this model to our international subsidiaries. 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 GROUP – was 76.4 per cent.
Individual job performance reviews
Once a year, we conduct individual job performance reviews for all our sales lines with the exception of Media-Saturn 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 2015/16, Media-Saturn supplemented its competency model "Passion for the Customer" by an online-based 360-degree feedback instrument and introduced it to high-potential managers. This instrument can be applied flexibly and can also be used for 180-degree feedback.
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 360-degree feedback meetings.
At Media-Saturn-Holding, the Advanced Management Programme (AMP) began in the spring of 2016 after the pilot phase was completed. The objective is to prepare highly qualified employees for tasks in their professional and management careers by giving them their first leadership experience. Programme items include, for example, performing within a management team, enhancing communication skills as well as developing leadership capabilities. In addition, the programme should also encourage the participants to take an active role in implementing processes of change within the Media-Saturn group of companies. The AMP bridges the gap between the development programme for specialists and leaders at the level of department manager and manager (Foundation Management Programme), and the development of top management. Therefore, Media-Saturn-Holding has a consistent set of selection and development tools for all professional and leadership levels.
With the goal of supporting the personal development of our employees, talented employees with the potential for leadership positions 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 come from the world’s leading business schools, among others, the Business School for the World (INSEAD) in France and Ashridge Business School in England. During the reporting period, about 100 future and current top executives took part in these programmes.
Pushing ahead with the group-wide focus on sustainability, METRO GROUP launched the “METRO Sustainable Leadership Programme” for young managers for the second time in financial year 2015/16. In the context of this programme, 24 international participants complete a 1.5-year programme cycle focusing on the development of in-house sustainability projects. The projects in such areas as procurement, people and recycling are scheduled to be implemented by mid-2017. During the reporting period, METRO Cash & Carry again conducted the “Crossing Borders” initiative, which is specifically aimed at young executives. In the process, 20 participants traded jobs for 60 days. As part of a practice-oriented project, 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 insights into conceptual and strategic activities through service in the administration division. The practical change of perspective in a host country gave participants the opportunity to further develop on a personal and professional level while sharing their own expertise with the team there.
To foster the informal exchange beyond hierarchical and functional boundaries, we offer our employees of the METRO GROUP companies at the Düsseldorf location the opportunity to participate in a mentoring programme. In financial year 2015/16, this programme led to the formation of 36 mentor pairs.
The German subsidiary of Media-Saturn is taking new paths to prepare the company and its employees for Working World 4.0. Under the heading “Ambidexterity”, managers are trained with a view to current and future challenges. Organisational ambidexterity describes the ability of organisations to be efficient and flexible at the same time. Two sources served as a basis for the individual preparation of workshop content: management’s new vision for the future, and 360-degree feedback on Media-Saturn’s competency model. With the help of peer coaching, the participants are additionally trained in self-reliance and problem-solving skills.
Employee turnover rate
During the reporting period, average job tenure rose to 9.2 years (2014/15: 8.9 years). Turnover rates varied widely according to region. The development of the fluctuation rates by region is shown in the graphic for comparison.
METRO GROUP turnover rate