“Executive Pay schemes must take into account long term as well as this year’s numbers”

Monday, 7 February 2011 00:35 -     - {{hitsCtrl.values.hits}}

Dinesh Weerakkody met Ian Mintram VP Human Resources responsible for Emerging Markets in London recently to discuss some of the Human Resource challenges facing the global Pharmaceutical Giant, GLAXO SMITHKLINE (GSK).

The company is headquartered in London, United Kingdom and is the world’s third largest pharmaceutical company measured by revenues after Johnson & Johnson and Pfizer. Here are the Excerpts of the interview.

Q: Today regulators and corporate boards are hung up with new governance structures and rules. What change has the new governance regime brought into HR?

A: The world we operate in is entirely different from when I first started in international HR 20 years ago. The increased focus on compliance and governance permeate many aspects of HR. As an example we have reviewed all our sales incentive schemes worldwide to ensure that they cannot be viewed as driving inappropriate behaviours. We also report on compliance violations across the globe in order to ensure we maintain consistently high standards wherever we operate. Together with our Compliance and legal colleagues, HR play a key guardianship role as well as ensuring employees are fully aware of their obligations.

Q: Customer service has become the new big thing with technology helping corporate to take service to another level. What can HR do to ensure customer service becomes corporate culture?

A: HR can support such a culture change at a number of levels.  Firstly HR can help craft the values statements of the Company to ensure that the customer is central to the ethos of the organisation. Secondly, where appropriate incentive and other HR systems should be redesigned to reward excellent customer service. Thirdly HR can support with appropriate recruitment, training and education. Finally the HR function itself should exhibit exemplary standards of customer service to its internal customers.  

Q: The War on talent has forced MNCs like GSK to fight back through talent innovation. How has the current uncertain economic climate in the world affected GSK’s approach to talent management?

A: Developing a strong talent pipeline is, by its nature, a long-term process and therefore the current economic uncertainties have not really had a bearing on our approach. Indeed we are currently really focusing on building a strong pipeline of talent from the emerging markets so that in 5- 10 years time we have a senior management cadre that reflects where our growth will be coming from.  

Q: How successful has GSK been in Leadership succession?  

A: At the top of the house we were very successful in having a three suitable internal candidates for the CEO role when the previous CEO retired. Having said that we have identified that whilst we have some very strong candidates for top 200 roles in the company — we do have gaps. We have been more actively recruiting from outside in the last two years, as well as more aggressively developing internal high potential individuals .As indicated above we have also identified a need to develop more leaders from the emerging markets.

Q: As a global HR thought leader, where do you generally turn for Leadership wisdom?

A: I am fairly eclectic in my tastes. So personally I will seek insights from individuals within GSK and elsewhere who I respect. I will keep abreast of academic research on leadership. I also glean insights from works of literature. I am not a fan of management books that are poorly written and not researched  — which is sadly too often the case. I still ,however, continually refer to “Good to  Great” by Jim Collins ,which in my view is very well researched and provides some tremendous insights into what Jim Collins describes as “level 5 leadership” i.e. humility coupled with a fierce resolve to succeed.  

Q: Talking of top executive pay, what are your thoughts of linking variable pay to the level of risk undertaken? Also what are the new rules on pay linked to risk?

A: We are currently reviewing (a) the amount of pay at risk and, (b) what behaviours we are driving through our pay at risk.  At representative level in some cases we are reducing the amount of total cash at risk and also moving to including qualitative as well as pure sales targets, in order to ensure we don’t drive any inappropriate behaviours.  At more senior levels we are looking to a balance of yearly targets and longer-term rewards to ensure that our executives take into account the long term as well as this year’s numbers.   

Q: The fast changing business climate demands a whole new CEO skills set. What does it take to stay at the top for your CEOs around the world?

A: It requires our executives to continually work on their ability to lead through complexity, paradox and ambiguity. They must continuously balance multiple demands. In particular, they must stay connected to the external environment and represent GSK in a broad range of activities. They must also translate the GSK business strategy into something that is tangible and meaningful for our employees and give a strong direction.

The senior executives set the culture for their organisations and so they must be capable of creating the environment that will enable our organisation to be high performing and valued, trusted members of the society. It is a tough job!