British American Tobacco

SARA Event

Engaging employees in Total Rewards

4 October 2013

Today’s Presentation

BAT at a Glance

Business / HR Strategy

Integrated Core People Process

Reward Building Blocks

Our regional structure

-

British American Tobacco at a glance

We are one of the world’s most

international businesses

- 200+ brands

- Sold in around 180 markets

- Global market share 13%

- Market leader in 60+ countries

- More than 55,000 employees

- 44 cigarette factories in 39

countries

- Our companies buy more than

400,000 tonnes of leaf per year

- More than 100,000 farmers and

suppliers are directly contracted

Closer to home - Our Business

The BAT WayOur Strategy to deliver shareholder value

WORLD’S BEST

AT SATISFYING

CONSUMER

MOMENTS IN

TOBACCO

AND BEYOND

LIVE A HIGH PERFORMANCE

CULTURE

REWARD

STRATEGY

Reward

Philosophy

Reward

Architecture

Context of Reward in British American TobaccoOur reward strategy, philosophy & architecture

Reward Architecture

Salary Incentives

Battle Field Bonus

BenefitsNon-monetary

recognition

Reward Channels

Rewarding

Individual

Performance

Rewarding

Group

Performance

Rewarding

Organisational

Membership &

Individual

Performance

Rewarding

Bahaviour

Reward Channel Objectives

Process and Technology Enabler

Facilitates flawless execution

BCC FOOTPRINT - governs reward strategy & policy

CONTROL ENVIRONMENT - governs reward practice

GOVERNANCE ENABLER

SURVEY

FOOTPRINT

Delivers market

intelligence &

facilitates

reward insights

JOB

EVALUATION

Enables

internal &

external reward

comparisons

Benchmarking

Enabler

COMMUNICATION

Delivers internal

feedback on

reward & facilitates

buy-in on reward

strategy, policies &

practices

TRAINING

Builds reward

capability

where required

Engagement

Enabler

Why people workThe Total Reward Proposition

Employees consider the following when deciding to stay and pro-actively contribute to the

success of an employer as well as when deciding to join a new employer…

What draws talent, makes them stay and inspires them….

The remuneration

on offer, particularly

the perceived

competitiveness,

fairness, flexibility

and transparency of

the remuneration on

offer

The “hard” culture

(e.g. office

ergonomics, work

equipment, etc.) and

“soft” culture (e.g.

leadership style,

peer relationships,

etc.) on offer from

the organisation.”

The perceived

training,

development and

career opportunities

offered by the

organisation

Corporate reputation

of the organisation

Employee

Capabilities &

Aspirations

Organisation

Capabilities &

Potential

Employee

Performance Objectives &

Measures of Success

Organisation

Performance Objectives

Target Achievement

E

N

G

A

G

E

M

E

N

T

AGENDA

• Performance

• Potential

• Development

• Succession

• Structures

• Retention

REWARD BUILDING BLOCKS

I

N

T

E

R

N

A

L

E

X

T

E

R

N

A

L

+

Integrated Core People Process

Career &

Development

PerforM

Performance

Contract

TRM

Individual

Development Plan

Employee

Capabilities &

Aspirations

Integrated Core People Process

Career &

Development

Individual

Development Plan

Three compulsory sessions

per annum

Assess capabilities:

• 360 Leadership

Capability Assessment

• Functional Competency

Assessment

Confirm Career

Aspirations

Organisation

Capabilities &

Potential

Company Benchmark:

• Leadership Passages

• Required Functional

Competencies per JG

Career PathsStudy Assistance

+

International Career

Opportunities

Integrated Core People ProcessPerformance Management

PerforM

Performance

Contract

Employee

Performance Objectives &

Measures of Success

Organisation

Results and output

• Performance Rating to Calibration

• Performance Ratings to Reward

Three compulsory sessions per annum

1. Set PO’s at beginning of the year

2. Mid-year review

3. Year end final review

• Corporate Targets

• Scorecards & Ratings

• Annual Incentive payments

• Quarterly Company performance

feedback – No 1 Live

• In-conversation sessions with senior

management

Pay Differentiation Max Variable Pay

Reward Building BlocksCyclical Reward Employee Engagement

• Reward Package / Benefits / Policies shared at employment

• Core Benefit education sessions – Funds / Medical / Insurance

• Annual increase / incentive letters to employees

• Annual fund statements to employees

• Reward / Global Mobility training for HR community (Extension)

• Compensation training for Line Managers / Market Overview

• Benefit review employee involvement – e.g. current Medical Aid

Offering review

• HR4U Customer Services – resolve employee enquiries First-line

reward enquiries – complex matters to Reward COE

• Non-monetary reward scheme winners / participation prompting

COMMUNICATION

Delivers internal

feedback on

reward & facilitates

buy-in on reward

strategy, policies &

practices

TRAINING

Builds reward

capability

where required

Engagement

Enabler

Reward Building BlocksReward Employee Engagement Media & Channels

Delivered:• Company Intranet – policies / ESS / MSS

• Written communication

• Physical training sessions / in-market visits

• Employee surveys and focus groups

• HR Customer Service desk

• In conversation engagement sessions – senior managers

• CEO Videos

• Road Shows

• Golden Leaflet publications (In-house magazine)

• Workshops - Reward Board Games

• Electronic Billboards

• Climate Surveys – Your Voice – Reward feedback

COMMUNICATION

Delivers internal

feedback on

reward & facilitates

buy-in on reward

strategy, policies &

practices

TRAINING

Builds reward

capability

where required

Engagement

Enabler

Reward Building BlocksReward Practice - Interim Salary Adjustment Process

• Portion of increase budget set aside for October interim adjustments

• Aim is to ensure high performers are on correct pay level + retention

• Line Manager receives list of employees to be considered

• Three year sustainable performance is taken into account, as well as potential indicators (TRM feedback)

• Following adjustments – engagement with employee - recognition

Pensionable Value

60% of Total Package

100% of Total Package

Additional Leave “Purchase” up to 4 additional leave days

Retirement Fund Exposure High Risk Medium Risk Low Risk

Cash Lump Sum

May opt for 13th December payment

Flex 0 – 100% of monthly TP as cash lump sum

Medical + Pension Fund

Default monthly contribution

Opt to increase to 3%, 5% or 7% of Pens. Value

OR

Reward Building BlocksReward Practice - TP Structuring Flexible Approach

Questions?