Succession planning and compensation models
Our systematic succession planning enables our skilled employees and managers to develop attractive careers within our company. Our remuneration models also provide incentives for employees to perform and to align their work practices with our guiding principles.
The systematic development of executives is a core responsibility of the general management teams of the respective group companies as well as of 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. At the same time, we are establishing specific international career paths for our executives in conjunction with METRO subsidiaries and METRO AG. Our career-planning processes also allow us to identify and support internal candidates for key positions in the company. This ensures that we can fill vacancies from our own ranks. In financial year 2017/18, the internal succession rate for the management of the national subsidiaries of METRO Wholesale was 79.1%.
To bolster our management capabilities and to achieve sustainable growth, we launched the Lead & Win programme at METRO in financial year 2016/17. The integrated learning concept is used to develop more than 15,000 executives and is divided into 3 to 4 modules for different management levels. For a period of 6 to 8 months, the participants learn about group-specific topics. The objective is for all executives to have completed the programme by the end of 2019. In financial year 2017/18, 1,243 executives had already completed the programme.
Furthermore, since financial year 2016/17, our top executives – employees who have highly complex tasks with special significance to the success of our company – have been asked to take initiative to develop an individual development plan based on a structured self-assessment of their personality in comparison with their management skills relevant to the position. This emphasises that executives are also responsible for their own development.
In another major initiative, the METRO Sustainable Leadership Programme (MSLP) supports approximately 30 international executives each year over a period of 1.5 years to develop their self-management and employee management and to implement an individual sustainability project. The projects address environmental and/or socially relevant topics such as e-mobility, waste reduction or sustainability in the supply chain. For example, one MSLP participant developed a self-assessment catalogue for small local fruit and vegetable farmers to help them cultivate their products in line with ‘good agricultural practice’ and to meet all METRO quality standards. At the same time, these suppliers are involved in the so-called ‘Ugly but Tasty’ project, which deals with the marketing of non-standardised fruits and vegetables and thus helps these smallholders reduce post-harvest losses.
Individual job performance reviews
As part of our Results & Growth process, all sales lines conduct clearly structured, individual performance reviews once a year. This allows us to better assess progress and skills and establish a strong feedback and development culture. We define the corresponding priorities at the beginning of each financial year, which are then examined and adjusted as necessary through mid-year performance reviews. The performance review is then conducted at the end of each financial year and also incorporates a feedback session, in which compliance with the group-wide guiding principles is also addressed.
Systematic succession planning
With the Leadership Talent Review (LTR) we have established a long-term-oriented process to develop our candidates for top positions within the company. The process supports our management team in identifying and supporting talented employees at an early stage. Once a year, we use this review to discuss succession planning for key positions. In the LTR, we examine the expertise, skills and experience of every candidate and rate these individuals according to the particular responsibilities of their respective positions. Subsequently, the employee and his/her line manager then create a career development plan and determine targeted measures.
Performance-based remuneration for executives
Our Perform & Reward remuneration system comprises a monthly fixed salary as well as 1-year and multi-year variable remuneration components that are essentially tied to our company’s business performance. Additionally, the 1-year variable remuneration considers our executives’ individual target achievements, generation of additional value for customers as well as their implementation of our guiding principles in their daily work. Among other things, the multi-year variable compensation incorporates a sustainability component.
The remuneration model for top executives is based on the following 4 principles:
- Fair and internally consistent compensation
- Performance-based pay
- Market-driven and appropriate salaries
- Encouragement of role model behaviour
In each case, we used the sustainable development of the wholesale and retail segments as a basis for the assessment of 1-year and multi-year variable remuneration. This means that the managers are directly involved in the success of their respective units.
For both business segments, the 1-year variable remuneration is based on sales and profits. In the wholesale segment, customer satisfaction is an additional relevant key performance indicator. As part of the multi-year variable remuneration (long-term incentive, LTI), a specific plan has been developed for the top managers of the group with focus on the increase in value of each business segment. Among other things, the LTI is based on the future value of the company, which is assessed by external analysts. In both plans, sustainability is evaluated by the rank which METRO achieves in the Corporate Sustainability Assessment by RobecoSAM. Inclusion in the Dow Jones Sustainability Index is decided based on this ranking.
Executive compensation is complemented by benefits, such as an attractive pension model, encouragement for health check-ups and a mobility budget that can be used for a vehicle or train journeys as part of METRO’s ‘Green Car Policy’.