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A Journey of Transformation

General Mills’ New Approach to Pay and Performance

In 2016, General Mills announced a new global organizational structure to support growth and drive greater efficiency by streamlining the company’s leadership, maximizing global scale and increasing operational agility.

To reinforce an element of this transformation, General Mills partnered with Mercer to revamp the company’s performance and rewards systems to support key priorities affecting business results, including faster decision making, improved organizational agility and an increased focus on accountability and performance.

Preparation for the Journey: Begin with Internal Input and an Outside Ear

The pay and performance journey began by asking more than 15,000 employees about a wide range of topics, including what attracted them to General Mills, why they stay and their overall satisfaction with total rewards.

After distilling the results of interviews, focus groups and surveys, three key messages became abundantly clear. Employees wanted:

  1. The HR function to make things clear and simple, yet personalized;
  2. Additional support from the HR function with creating a road map for their professional success; and
  3. To feel empowered by the HR function

The insight gained from the interviews, focus groups and surveys provided a strong foundation to move forward.

General Mills is a leading global food company that serves the world by making food people love. Its brands include Cheerios, Annie’s, Yoplait, Nature Valley, Häagen-Dazs, Betty Crocker, Pillsbury, Old El Paso, Wanchai Ferry, Yoki, Blue and more. Headquartered in Minneapolis, Minn., General Mills generated fiscal 2018 proforma net sales of U.S. $17.0 billion, including $1.3 billion from Blue Buffalo. In addition, General Mills’ share of nonconsolidated joint venture net sales totaled U.S. $1.1 billion.

We listened carefully to employees and what we heard is that people wanted greater transparency and clarity for how their performance is evaluated. The new system is much simpler and replaces our previous system that had become overly complicated over many decades.

Jacqueline Williams-Roll, CHRO, General Mills

Organizations generally underemphasize the importance of asking for, and listening to, the perspectives of employees. Furthermore, by going beyond questions on general preferences and seeking to learn about employees’ risk tolerance and perspective on trade-offs, General Mills received a rich source of data essential to the development of an effective compensation program.

In situations that involve large-scale change, such as this one, effectively capturing and addressing this type of in-depth employee feedback dramatically improves the likelihood of a successful adoption.

Based on the direction provided by leadership, research, employees and consultative guidance, General Mills defined three basic principles for change:

  1. Structure programs to be performance-based so that differential contributions are rewarded with differential pay;
  2. Ensure programs deliver what employees most value; and
  3. Make rewards competitive within the local marketplace, not only in pay elements such as base and bonus, but also in the way the program is structured.

General Mills then focused on delivering these principles by:

  • Increasing transparency to let employees know where they stand within the organization;
  • Simplifying; and
  • Ensuring global consistency.

Performance: Measure What Matters

One initiative General Mills set out to accomplish was changing employee incentive programs so that measured business and individual performance can drive results for the company.

While the existing approach had served General Mills well in the past, it was not competitive and did not support the agile organization it needed to become. Through this initiative, General Mills:

  • Significantly reduced and simplified 250-plus blends of business unit performance;
  • Reduced 43 individual performance ratings to five;
  • Created one unified and global approach to performance evaluation;
  • Simplified the bonus calculation;
  • Provided greater financial rewards for exceptional performance and significantly smaller rewards for substandard performance; and
  • Increased visibility to business performance throughout the year.

This strategically aligned and easier-to-understand incentive system provided for greater transparency and greater line of sight to things that make a difference in the growth of the business.

It’s about getting back to basics and aligning employees with the three to fi ve most important things they need to deliver on to drive growth for the company.

Jacqueline Williams-Roll, CHRO, General Mills

Well-designed incentive programs support the strategic imperatives of the business and align the objectives of individuals with those of the business in a mutually beneficial way. Programs that appear to be overly complex typically do not achieve this ultimate aim.

When evaluating incentive plans, it is a best practice to design programs that:

  • Provide local market competitive levels of compensation;
  • Are well understood by participants;
  • Have goals that are reasonable;
  • Are aligned with the work of participants;
  • Are readily affected by employees; and
  • Are valued by employees.

Transparency: Let Employees Know Where They Stand in the Organization

Another General Mills initiative was to simplify how employees are leveled in the organization. Previously, General Mills used a numerical level (e.g., level 15) to categorize employees. For example, a manager may have been a level 15 or a level 17. When the company dug deeper, General Mills learned that this system had evolved to serve two different objectives simultaneously. First, it aimed to identify jobs that were the same scope of accountability everywhere. Second, the level aimed to ensure that it delivered pay competitively. Not surprisingly, the competitive market and internal alignment didn’t always match each other. The result was that over time, using a single approach to try to accomplish both things meant it wasn’t serving either purpose well.

As a result, General Mills separated its old level structure into job bands (the career framework used to describe internal organization hierarchy) and pay grades (the system used to provide competitive pay). While the effort undertaken to separate these two systems was immense, the results have been great. It allowed General Mills to:

  • Have a clear and globally consistent view of its hierarchy of jobs;
  • Ensure that all employees are paid competitively; and
  • Establish a common structure that prepared it for Workday implementation.

A well-defined career framework enables organizations to build workforce capabilities through proactive and deliberate career management, and communicate to employees the organization’s career philosophy and approach. It also helps explain the paths for professional growth and career advancement around which an individual can build their skills, capabilities and work experiences. It sits at the core of the business and touches on all workforce initiatives.

A well-defined career framework also provides employees with the information and guidance that enables them to seek out experiences and learning that will help them progress their careers via routes that meet business needs.

The objective of a career framework is very different from the objectives of a pay structure. Pay structures aim to communicate an organization’s compensation philosophy and to ensure that employees are compensated fairly and competitively.

Separating the two systems, as General Mills has, typically improves their overall effectiveness.

Under the previous system, job levels were trying to do multiple things — set pay and level within the company. The reality is that the external market can value jobs differently than a company does internally, based on job scope. General Mills decided that separating job bands and pay grades made much more sense.

Five Lessons Learned

This journey was not easy, but there were hundreds of lessons along the way. Here are some of the most important lessons learned:

  1. Ask employees what they want and listen to what they say.
  2. Partner with outside experts to provide an objective perspective and additional horsepower when needed.
  3. Gain access to critical decision-makers, provide regular updates and plan for real-time feedback.
  4. Set your core principles early so that when unexpected things happen (and they will), you can go back to those core principles to determine the best plan of action.
  5. Consider a phased approach and pilot changes with trusted advisors. For General Mills, this proved to be effective as it was able to implement quickly and optimize its processes before rolling out the program broadly.
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Bonus lesson: Don’t underestimate the importance of communication and change management.

General Mills is still assessing the impact of the changed programs and its achievements (See “Achievements.”) It will no doubt have adjustments and additional lessons learned as it moves forward.

Postscript: Other Benefits of the Transformation

#workdifferently

Historically, the culture at General Mills is very collaborative, but relatively risk-averse. This often resulted in slower decision speed, delayed actions and effort spent on things that may not have been appropriate.

To combat this mentality, General Mills tagged this culture change and its broader HR transformation initiative #workdifferently, which heavily influenced the transformation efforts to revamp the performance and rewards system. As General Mills moved into the implementation phase, HR let people know that it might not yet have all the answers, but that it was letting principles guide the process, and it would address questions as they came up.

For example, throughout implementation project champions made themselves available (via numerous in-person and virtual setting) to publicly talk about the changes employees would experience. Participation in these events went a long way to building trust and understanding. This was just one example of how the company began to embody a more agile and iterative work environment. While the initial changes described at these mettings may not have been perfect, General Mills pushed ahead and quickly iterated toward a more comprehensive solution. Participation drove the right discussions, accelerated progress and allowed the organization to spend time on the things that matter most.

Improved Focus on Performance

Undoubtedly, the improved focus on performance and the simplified alignment of individual objectives with those of the business has led to an increasingly performance-oriented culture. Spurred in part by the clear alignment of compensation programs and business results, employees now talk about business performance measures. Leaders are using quarterly performance snapshots as motivation for employees. This type of direct communication tied to actual business performance is critical to improvement.

Common Language

General Mills now has a common way of talking about structure, job bands and pay grades that employees use around the world. This has made global talent management much easier and understandable. It also facilitates better global connections by knowing with whom you’re working and what their role is within the company.

Deepened Expertise Within Human Resources

Finally, this transformation empowered HR analysts and transformed their roles. Throughout the course of the work, analysts need to learn about the strategic needs of the business, evaluate every position and develop strong connections with their client teams. As a by-product, this closeness with the business and expertise with the data resulted in a profound increase in analysts' credibility with the teams they support.



Andre Rooks Andre Rooks is a principal in Mercer’s Career Practice.



Teressa Silverman, CCP Teressa Silverman, CCP is a compensation manager at General Mills.



Kristina Streed, CCP Kristina Streed, CCP is a compensation manager at General Mills.

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