Delivering successful adoption: Accelerating a pay for performance – Unicredit

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Delivering Successful Adoption - Accelerating a Pay for Performance Culture

Andrea VintaniHead of Reward, Benefits & HR PlanningUniCredit – Human ResourcesParis, 27 October 2015




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DISCLAIMER This Presentation may contain written and oral “forward-looking statements”, which includes all

statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number of assumptions, expectations, projections and provisional data concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the control of UniCredit S.p.A. (the “Company”). There are a variety of factors that may cause actual results and performance to be materially different from the explicit or implicit contents of any forward-looking statements and thus, such forward-looking statements are not a reliable indicator of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. The information and opinions contained in this Presentation are provided as at the date hereof and are subject to change without notice. Neither this Presentation nor any part of it nor the fact of its distribution may form the basis of, or be relied on or in connection with, any contract or investment decision

The information, statements and opinions contained in this Presentation are for information purposes only and do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would be unlawful (the “Other Countries”), and there will be no public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or the Other Countries

Neither the Company nor any member of the UniCredit Group nor any of its or their respective representatives, directors or employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it




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UNICREDIT AT A GLANCE

Employees: more than 129,000 Branches : 7,500 Banking operations

in 17 countries International network spanning:

~ 50 countries Market leader in Central and Eastern

Europe leveraging on the region's structural strengths

Operating income: ~ 22,5 bn Staff Expenses: ~8,2 bn

Figures as at December, 31th 2014




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WE STARTED AN EVOLUTION MADE OF DIFFERENT STEPS…

1st Group Performance &

Development System

1st Group Incentive System

Integration of Performance and

Compensation processes

Since 2006 we have undertaken an evolutionary journey of our HR processes, aligning them as much as possible to Business needs and Company Sustainability

New Incentive System approach

Change in process ownership

1 2New Tools supporting the change

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… INTRODUCING KEY CHANGES TO PROVIDE BUSINESS LEADERS WITH ALL THE LEVERS TO EFFECTIVELY MANAGE THEIR PEOPLE

Incentive system approach

Formulistic approach based on algorithms and

matrixes

HR-driven approach

Manual collection and approval of proposalsAvailable

tools

Process ownership

More discretional approach based on

available bonus pool

Managers

Global effective IT Tool open to Managers

FROM… … TO

1

3

2

http://www.google.it/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCPuEuOaapMgCFUJyFAodZg4KQQ&url=http://www.clipartsheep.com/find-calculator-image-14-of-20-clipart/dT1hSFIwY0RvdkwzZDNkeTVqYkdsd1lYSjBjR0ZzTG1OdmJTOWZkR2gxYldKekx6QXhNUzlsWkhWallYUnBiMjR2WTJGc1kzVnNZWFJ2Y21OdmNIbGliMjlyWHpBd05EVXlORjkwYm1JdWNHNW58dz0zNTB8aD0yMzN8dD1wbmd8/&bvm=bv.104317490,d.bGg&psig=AFQjCNHOVZrPZARItwzEh--48ao_s5eYaw&ust=1443889681070409

http://www.google.it/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=&url=http://www.content4demand.com/blog/research-studies-a-powerful-and-often-overlooked-b2b-content-marketing-tool/&psig=AFQjCNFkI7rU2Uxc8YNC77xZLw5rlMekGQ&ust=1444157464551652




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Material change in decisions to be taken by Managers

12 bonus pools, one for

each Country/Divisio

n

NEW INCENTIVE SYSTEM BASED ON BONUS POOL APPROACH Incentive system approach

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Each available pool is managerially cascaded by the

pool owner amongst business units

Line Managers are asked to allocate

bonus to individuals, based on differentiation and meritocracy criteria

http://www.google.it/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCIrR_dnUrcgCFYcQLAodYhcNEA&url=http://blog.xpressdocs.com/advertising-budget-allocation/&bvm=bv.104317490,d.bGg&psig=AFQjCNH1Zp8bN2n_GZzZE2VF_5Z59H4qqg&ust=1444214561781111

http://www.google.it/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCOmsisK4wsgCFUndLAodlfMCeQ&url=http://oldageselldown.com/invest.html&bvm=bv.104819420,d.bGg&psig=AFQjCNEpW1XlJhLqDewyehpbdg6Mx6B6HA&ust=1444928536901118






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− chance to effectively and transparently take decision on compensation & development

− ….assuring consistency between pay and performance with a rigorous evaluation and by rewarding right behaviors

− managers are asked to give a clear and constructive communication about performance, compensation and career & development plan in order to motivate and support performance excellence, thus feedback became even more vital

− tools and opportunity to differentiate and reward according to the level of contribution and goals achievement among own reports

NEW PROCESS OWNERSHIP: OPPORTUNITIES AND CHALLENGES FOR MANAGERS

Process ownership2




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NEW TOOLS SUPPORTING PAY FOR PERFORMANCE Available tools3

New Tools supporting Pay

for Performance

Unique IT system covering Performance and

Compensation processes

Cross Countries implementation

Real time widgets allowing Managers to take

informed decisions

during the cycle

New Compensation

module, customized and based on bonus pool approach




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NEW TOOLS & ANALYSIS SUPPORTING PAY FOR PERFORMANCE

> 20% - - 1% 6% 2%

10% < x < 20% - - 2% 7% 1%

± 10% - 1% 23% 28 % 5%

-20% < x < -10% - 1% 8% 4% 0,2%

< -20% 1% 2% 9% 1% 0,1%

E. Below D. Almost Meet C. Meets B. Exceeds A. Greatly

Exceeds

Bonu

s vs

Pos

ition

Ref

eren

ce

Overall Performance rating

BONUS VS. POSITION REFERENCE &

PERFORMANCEBONUS VS. POSITION

REFERENCE

> 20%

10% < x < 20%

± 10%

< -20%

-20% < x < -

10%

Performance Distribution

E. Below D. Almost Meet C. Meets B. Exceeds A. Greatly

Exceeds

During the cycle: real-time tools to ensure pay for performance

After the cycle: ex post check and pay for performance monitoring

Available tools3




A STRUCTURED CHANGE MANAGEMENT PLAN HAS BEEN PUT IN PLACE IN ORDER TO SATISFY DIFFERENT NEEDS

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BOOSTING CULTURAL CHANGE EMPOWERING BUSINESS LEADERS AS PEOPLE MANAGERS…

HR Community involvement

Leadership Interviews Webinar by

Head of HR

APP

Top Management commitment

Emotional Video

LeafletRoadshows & EventsCEO

Blog




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… ENABLING TECHNICAL CHANGE SUPPORTING AWARENESS AND COMPREHENSION OF NEW PROCESSES & TOOLS…

Workshop

Communication Kit

Video Tutorials

Poster

Total Comp Statement Bonus

Dashboard

Intranet & HR Magazine




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… AND NAVIGATING THE CHANGE MEASURING RESULTS AND LISTENING TO THE VOICE OF CUSTOMERS

More than 3.000 Executives, Talents, Expats and their Managers

To collect their insights and better understand how to improve the process and enhance the tool

WHO

WHY

Through a global online instant survey, to be answered anonymously

At the end of the whole process, in order to gather a comprehensive feedback

HOW

WHEN




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Satisfaction with IT Solution

IT Tool easy to deal with

Information required relevant 91%

89%

81%

Strongly agree

Agree Disagree

12% 77% 9%

14% 67% 16%

14% 77% 8%

% of positive results Strongly

disagree2%

3%

1%

Good level of satisfaction about the IT tool (89%) with some room for improvements

~650 constructive feedbacks collected through open-ended questions

OUR CUSTOMERS' EXPERIENCE AFTER THE FIRST YEAR

Personal access to Incentive module1

Incentive process better than before1

Availability of info to take decisions1 83%

87%

87%

Usefulness of widgets1 74%

1 We asked all Managers of Identified Staff that were invited in the tool to fill in a short survey regarding the new IT tool. Response rate was 20%, similar to what we have experimented in bigger surveys on EDP/TMR/GMR experience.

9% 78% 13% 0%

9% 74% 17% 0%

9% 65% 26% 0%




FROM HEAVY MANUALS TO SHORT VIDEO TUTORIALS: A SUCCESS STORY

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"Video tutorials eliminate every uncertainty in evaluation process."

"I liked the idea of a video tutorial which explains the fundamentals very well"

"Video tutorial is a useful addition to guide you through the process."

"Video tutorials are nice and also useful."

Customers' voice on video tutorials

Consistently with our communication strategy, we decided to overcome heavy, paper-based manuals and to switch to an easier way to reach and educate our people.

AppLearn supported us in developing 5 video tutorials related to the main phases of Performance and Compensation processes, providing "just-in-time" training solutions, duly customized based on language and target.

Videos are directly accessible from the home page of the Performance and Compensation tool, reducing efforts and time spent to gather instructions.

76% of people who watched tutorials considered them useful. Some of them added personal comments…

http://www.applearn.tv/home




Full transparency on overall bonus allocation at Group level,

across 22 Countries and 130k headcounts

OTHER EXCELLENT ACHIEVEMENTS IN 2014

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Significant increase of the Identified Staff population (x10 vs 2013 IS; x2 vs 2013 Executives population)

Bonus payout one month before than previous year




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ENGAGEMENT

• In the last few years UniCredit faced great challenges that required strict cost management and restructuring…

• … Nevertheless, we kept our people engaged and committed

PS '10 PS '11 PS '13

73 74

PS '14-'15

7776

ENGAGEMENT TREND (from People Survey)

Today, our challenge is to increase our Group's level of Engagement even further

PS '09PS '08

71

PS '06

7372




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OUR PATH WILL EVOLVE TOWARDS NEW CHALLENGES FOR NEXT CYCLE

2015

Focus on performance distribution, meritocracy and quality of performance appraisal.

Extension of tool coverage to Salary Review process

2016

2014

"Adoption"

"Quality"

"Comfort"




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Any question




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Thank you all!

Recruiting & HR

Delivering successful adoption: Accelerating a pay for performance – Unicredit