Already before the pandemic, many retailers in the UK and beyond were struggling to survive the so-called “death of the high street”. With a multitude of challenges in relation to changing consumer behaviour, spiralling overheads, and a shift to digital and e-commerce, retailers have been forced to transform the way they operate to stay profitable, and in some cases, alive. Marks & Spencer (M&S), one of the leading UK retailers, was no exception. With its 60,000+ employees and 1,500 stores selling food, clothing, and home products worldwide, M&S had embarked on a large-scale transformation programme to become a faster-moving, lower-cost, more digital-first business and ultimately return to sustainable growth.
At the heart of every successful business transformation are the employees who live and breathe it. M&S was looking to evolve their organisational culture and ask their colleagues to behave quite differently. They wanted to attract forward-thinking talent who would bring critical skills and capabilities, challenge perceptions, embrace change and help to drive the business forward. They recognised that a key enabler to the change would be the creation of a more relevant reward package to drive the right behaviours and attract, retain and engage the talent needed for success.
On Day two at the company, Chris Evans, the Head of Reward, was invited to a meeting with the CEO and presented with an ambitious challenge: to conduct a complete review of the organisation’s reward package to support the ongoing business transformation – and all within six months! Describing this type of opportunity as “striking gold”, Chris eagerly accepted the challenge.
Where to start with a challenge like this? M&S assembled their core project team and began planning for three distinct phases: Design, Implementation and Embedding. As with any reward review, best practice is to start by gathering both internal and external insights to inform reward strategy design, including internal listening exercises, external competitiveness analysis and evaluation of market trends.
From a listening perspective, M&S’s priority was twofold:
“For me, these are the two essentials for successful design. If it works for the business and works for our colleagues, then you’ve got a good thing going.”
Chris Evans | Head of Reward, Marks & Spencer
To find out what leaders wanted, Chris conducted 1-2-1 meetings with members of the executive committee to understand their future vision. There were five common characteristics in what they wanted for the future reward offering, which became the core principles for designing each part of the solution:
To find out what colleagues wanted M&S chose to use two of WTW’s most in-depth specialised reward surveys: Total Rewards Optimisation (TRO) and Total Rewards Prioritisation (TRP).
TRO and TRP are both types of conjoint surveys with differing levels of detail that ask employees to make trade-off choices to help determine preferences around rewards, benefits, wellbeing and career enablement using statistically robust methodologies.
Instead of a simple preference survey where employees are likely to tell you they value cash (and they’d like more of it please!), the conjoint survey design helps to get under the skin of what employees truly value. We then combined the employee preference data with the cost of making the changes to determine the most cost-efficient solutions for the organisation and inform where to prioritise investment.
As Chris observed: “it’s all about efficiencies – all about understanding what value colleagues assign to different elements and how much additional colleague satisfaction you’re going to get with each pound that you spend. That’s why it was so powerful.” The conjoint section of the survey was supplemented by traditional survey questions to gain further understanding around why employees value certain rewards and benefits. We received thousands of comments from colleagues giving their feedback on desired areas for change.
A common question we’re asked by our clients is how to effectively manage expectations of colleagues when launching a survey of this kind. How do you avoid concern from employees that you are asking trade-off questions with the intention of taking away aspects of their reward package? On the other hand, how do you avoid raising expectations that ‘Christmas has come early’? The answer: through an effective communications and change management strategy.
The M&S Reward team worked alongside their Internal Communications team to devise a comprehensive communications campaign across multiple channels. One very effective channel was their network of colleague representatives who had their eyes and ears on the ground and worked closely with the Reward team throughout the process. This helped to get the right messaging directly to colleagues about the intentions of the review: to genuinely improve the package by understanding colleagues’ reward preferences and to get the best ’bang for their buck’ by making changes within the limits of affordability.
“It’s all about efficiencies – all about understanding what value colleagues assign to different elements and how much additional colleague satisfaction you’re going to get with each pound that you spend. That’s why it was so powerful.”
Chris Evans | Head of Reward, Marks & Spencer
To supplement the internal insights from the surveys, WTW also provided M&S with external market insights on pay and bonus structures, benefits prevalence, and market competitiveness in the context of the retail industry and beyond. WTW was also asked to deliver a paper commissioned by the CEO to provide our independent view of whether the organisation’s hypothesis for the future of reward would meet their aims. To develop the paper, we used findings from the surveys and leveraged the knowledge of our colleagues in health, wealth and careers to provide the latest thinking and research around motivating employees to higher performance, pay transparency, recognition, employee wellbeing and consumer-grade communications.
As we often find with TRO and TRP surveys, they provided a few surprises.
Whilst colleagues do, of course, highly value their base pay, it’s important they believe they are paid fairly versus their peers and competitively in the market. They particularly valued the generous discount available for M&S colleagues in stores and online and overall, employees valued this even more than a pay increase. The discount that M&S provides is clearly a highly-valued benefit and the survey illustrated the advantages of optimising this benefit – for example giving both temporary and permanent colleagues access to the discount as soon as they begin working for the company and digitising the discount by linking to the widely-available loyalty card to remove the need for physical discount cards.
In addition, other themes emerged where leaders were not expecting such strong sentiment:
Interestingly, the opportunity to buy 5 days of holiday was even more valuable to colleagues than receiving 3 days for free, showing just how important having flexibility is for colleagues. For retailers where there is a constant challenge to ensure the right numbers of staff in stores to serve customers, there can often be reluctance from managers to introduce additional flexibility – but the survey provided clear evidence of the value that the introduction of Holiday Buy would create.
The survey results showed that beyond the wellbeing apps and education resources already provided in relation to colleague health, colleagues would really value a tangible health benefit. Having tested a menu of choices in the survey, M&S found offering a Virtual GP Service would be extremely popular and an optimal change to make for the business. Whilst relatively inexpensive, the benefit is also made available to family members and enables employees to conveniently access healthcare advice over the phone without having to take the full day off work to attend an appointment – a winning formula for both the business and colleagues. Another popular change was the introduction of Check4Cancer, now made available to the wider workforce.
The responses to the free-form questions at the end of the survey emphasised the fact that reward is only one element of the colleague experience. What colleagues also wanted, and needed, is the right level of support from their line managers, including having productive conversations around pay, performance and career progression and receiving better support for their wellbeing needs. That’s why M&S is re-emphasising line manager capability as a direct result of the survey – to re-energise and upskill line managers and provide them with the tools they need.
“I think a survey like this is a necessity for any company making multi-million pound decisions affecting its people. The insight we have gained far outstrips the cost of the surveys.”
Chris Evans | Head of Reward, Marks & Spencer
When looking back at the surveys conducted, Chris said: “the results have provided us with rich information about the value that colleagues assign to the different elements of the reward package – this really did help to support the changes being discussed with the executive team”.
The Reward team now frequently use the data from the surveys to inform its reward decisions. One powerful example was the review of hourly rates for Customer Assistants. With inflation driving big increases in the cost of living, there was pressure to set rates at the top of the market. The surveys had shown, however, that colleagues recognised the value of the generous pension and discount benefits at M&S. As a result, the team could set a slightly lower rate, saving millions of pounds, and still be confident that the overall package was the best in the market. Ultimately, this is all about making data-led decisions and using science to determine the right changes to make that work for colleagues as well as for the business.
Now M&S has completed the Design and Implementation phases of the project they are embedding the changes. The ultimate goal is to make sure every single colleague understands and values their reward package, including in particular the benefits that the organisation provides to look after their wellbeing. This is such an important topic, especially in light of the emergence from the pandemic, and this will be a particular focus for M&S moving forward.
With the performance of the business continuing to improve the transformation is clearly on track – and thanks to data-driven insights, this is now also underpinned by a future-focused reward offering.
