Unilever reaps rewards from home-grown employee benefits system

Profile picture for user Madeline Bennett By Madeline Bennett August 29, 2019
Summary:
uFlexReward uncovers hidden secrets of staff incentives, from bags of rice to briefcase allowances.

Unilever logo

As the workplace becomes more heavily populated by millennials and Gen Z’ers, so organizations need to shift their culture and working practices to keep this new band of employees satisfied and productive. For Unilever, a multi-national company about to turn 90 next week, action was needed to keep the business relevant in the digital age, and able to attract and retain the best talent.

The answer? A digital rewards platform that could provide a real-time overview of benefits pulled from different data silos, from compensation and pension to share options and health.

Unilever first began work on a new rewards system 10 years ago, catalysed by the firm wanting to understand how the $5.8bn it was spending on employee compensation every year (this is now nearer to $6.5bn) actually broke down.

At the time, Unilever was unable to easily get that information, which was a combination of finance, payroll and HR data pulled in from around 110 countries. This huge maze of data made it tricky to understand if what was being offered was actually what employees wanted, while staff were left trying to assess their best options based on a spreadsheet they’d receive once a year – which would often be out of date soon after sending, due to promotions, moves and benefit changes.

Nicola Wells, COO of uFlexReward and Global Reward Director at Unilever, explains:

Like many companies, we had a myriad of reward programs, and people did not understand them. So there were constant questions. People didn't know what to get, what they could get. They didn't know what they were eligible for. They just didn't understand it. It was like a black box. The only thing that they could feel guaranteed about was what was paid in their payslip every month. We looked at how could we start to create total rewards statements to help communicate to employees and that was our real driver. But also use that information to understand more ourselves as a business.

Unilever spent a year building its bespoke Total Rewards System (TRS), which went live in 2011, and over the intervening years, the firm added modelling, feedback and benchmarking modules. Employees were able to more easily view their benefits options and the firm could see how that $5.8bn was being allocated.

However, although it had became a bit of a crown jewel in the company, as Wells notes, Unilever came to the realisation that TRS needed a refresh as it was running on “dying" technology: 

It went live in 2011. In technology terms, seven years of running a system - we hadn't focused on it to keep the technology up to date, you couldn't keep patching it. It's a bit like people when they talk about PeopleSoft - it’s an incredible system, but then it has got to a point where it's hard for people to keep it going. So everyone's moving to Workday or SuccessFactors, it's just one of those natural needs to move to the next level of technology. The original one wasn't in the cloud, we didn't have micro-services, all things that are just expected now.

Decisions

Unilever had to take a decision to keep going on the old technology, move TRS into another system such as Workday and try to replicate the functionality, or rebuild from scratch. It teamed up with Pilot44, a Silicon Valley-based boutique consultancy, to explore any systems out there that could do what the firm already had, or better.

This resulted in a list of 20 firms identified as having a decent opportunity, from Workday and PwC to Infosys and some lesser-known players; a mix of big HR providers, smaller boutique systems that couldn’t replicate everything and system developers that could build something from scratch.

Unilever had initial conversations with eight possibles from the list, which were all invited to pitch for the project and given the same opportunity: a 25 minute presentation followed by 15 minute Q&A. The organization had a scoring system ready to grade the pitches, and all the relevant functions from across the business were present: finance, pensions IT, procurement, reward.

From this process, Unilever selected three to go into the final phase, which was building the prototype to run a live lab. The firm had already begun working on the project using the Agile methodology with scrum teams, two-week sprints and daily meetings, and was looking for a partner well-versed in that approach. The three bidders were given three two-week sprints to develop the prototype, and a relatively unknown company in the form of systems developer Endava came out on top. Wells says: 

We’re really pleased with how we ran this procurement session, because we really didn't do it the way we normally do, which is long and drawn out with lots of presentations. The number of times that you get sold these things that are amazing, and then when you get it, it doesn't really quite do what you thought it was going to do. Because you’ve had death by PowerPoint, death by demo.

So my biggest tip is doing those very short live labs. We took the three that we liked and we made them work with us. If they're not prepared to do that, that tells you something. And if they are prepared to do that, you learn a hell of a lot. I was watching all three of them and you could see the differences. You test drive a car before you buy it; why shouldn’t you be able to test drive a product.

While Endava had no previous knowledge of HR or reward, Wells didn’t see that as a problem as she has plenty of expertise in those areas after a career spanning two decades; Unilever just needed the system expert. Endava certainly had credibility here, having built and run Worldpay and Vocalink, huge, proven products.

Rebuild

Endava began the rebuild in April 2018, and a year on the platform went live to 68,000 Unilever employees.

On the upgraded platform, staff get a real-time view of their total reward and benefits, what they’re eligible for, can print it out or show it online to their partner or bank manager, or even new companies if they’re looking at another job. Wells notes that often people are excited by a bigger salary, but don’t realise what they’re losing outside of just their pay:

We were losing people just because they get amazed by 15 percent more pay. And then you say – but are you getting any shares, are you getting a bonus? That isn't different to many companies, but ours is real time. Many will be on a quarterly or an annual basis, so it's out of date quite quickly.

The updated system is also giving Unilever valuable insights into what staff really love, and what are the less meaningful rewards, she adds: 

It’s been fascinatingly insightful that we’ve been paying for things no-one cares about and some are deeply ingrained but we don’t see as important. So when you get a chairman who says we need to cut costs, we can use the information to make better choices. We have evidence to back our decisions, it’s not just a gut feeling.

Globally, there were certain things we didn’t even know that we had. One of them, out more Asia way, was a rice allowance where we would give physical bags of rice to families. That we didn’t realise were doing, it isn’t necessarily  a high cost to Unilever because we buy en masse, but to the family that’s a massive difference.

We had other random things like a briefcase allowance. It was nonsense, you just remove them, it can help you harmonise. Because we're a heritage company, things just happen and then they never get taken away.

Spurred on by the many benefits of the platform, Unilever is expanding its portfolio from consumer goods purveyor to technology vendor. The firm has spun out a new company, uFlexReward, and is making a concerted effort to sell its rewards platform to other businesses. Wells explains: 

Big organizations are having to change how they work and a lot of what we see up and coming in business is some of the smaller entrepreneurial is what's winning at the moment. So how do we in Unilever emulate that a little bit, even though we're big? I guess our product kind of landed almost in the perfect storm because Unilever are keen to be entrepreneurial and drive the world in different directions in all areas.

“But this is only year one, and we’re not looking for hundreds of clients straightaway. We’ve got a fairly sensible view to grow this business. We looked at what others do, and what was really intriguing is there’s nothing hardly around reward, it’s all about talent, recruitment and analytics.

Rather than targeting the big conferences to drum up interest in the platform, Wells and her team are currently running small roundtable sessions, inviting heads of reward and HR along to discuss the future workplace and the role of uFlexReward: 

The world of work is changing already. My niece is 19 and she can't even envisage working somewhere more than three years. So if that's the case, the traditional world of a pension - how does that fit? Suddenly what we've known, it's like quicksand, it’s shifting all the time.

Long term, if we get more people on this platform, you can imagine having big companies, but you can also imagine having just individuals who manage their reward here. It's not today but you can see that kind of shift.