Leading Auto Manufacturer Case Study

A leading automotive manufacturer needed to reinvent itself and its business model for the 21st century, which led to a discussion on how human capital could support its future vision. This manufacturer realized that its transformation would touch all operational aspects of the business and require a new organizational structure, including a new business line devoted to next-generation vehicles. The future of the people function within the company would need to be re-tooled to become equally “leading-edge.”

The company needed to simultaneously incentivize the retention of high-performing talent in the “legacy” parts of the business, who were critical to generating current cash flow, while also “revolutionizing” its pay structure to attract the next generation of leaders and thinkers that could grow and innovate the next-generation business line. Given the breadth of the enterprise’s transformation, management and the board needed frequent visibility into engagement metrics across the broader employee population, workforce composition, and workforce cost in the “next generation” business line. The Compensation Committee worked with Semler Brossy to help the company understand its talent needs and how to ensure that the need for rapid transformation supported and enhanced the overall company culture.

We helped the company develop a human capital scorecard shown at all Compensation Committee meetings, which helped the committee keep a pulse on near real-time employee engagement. The scorecard also allowed the Committee and management to visualize changes in the organization’s critical talent populations as new talent was brought into the organization in the “next generation” segment.

We also helped the client think through how to use compensation and total rewards decisions to support a culture of urgency and efficiency. We centered on a “One Team” mentality, given that the legacy business was just as critical to future success as the nascent “next generation” business. Winning and losing together would, in theory, incentivize the “next generation” arm of the company to share insights and research learnings with the legacy business and for the legacy business to share “tried and true” methods with its newer sibling.

Additionally, we helped the company crystalize the factors that contributed to upward and downward decisions on bonus outcomes and what performance characteristics would influence pay decisions in future years. Individuals within the organization are now assessed on whether they are culture builders who contribute to efficiency and diverse thought (in addition to whether or not they hit their numbers). This focus on efficiency, cross-team collaboration, and diverse thought have led to key leaders seeking expertise in new areas, including staff functional leaders gaining certifications in lean.

Finally, we worked with the company to refine the value proposition of its equity program. Annual equity grants had been a prominent component of total rewards for leaders for many years, but grants had become stale and uninspiring. We helped the company ensure that equity grant sizes were right-sized for the right population groups—on balance, those in the “next generation” business preferred equity, so a higher percentage of total pay was provided in shares. We also worked with the company to redesign the performance-based equity program to align the program goals with internal success metrics (known throughout the organization because of cohesive leadership messaging, frequent town halls, and other employee engagement efforts). Combined, these two changes to the equity program increased ROI through consistent messaging and by ensuring shares went to those who highly valued the currency and would be most motivated by the performance goals.