A SERIES OF ARTICLES FRoM THE 2011 EMEA CoMPENSATIoN ...

STIMULATING ENGAGEMENT THROUGH
DIFFERENTIATED REWARD AND ENHANCED
PERFORMANCE: THE MAERSK JOURNEY
It may come as no surprise that the A.P. Moller–Maersk Group
is on a journey. With the world’s largest container shipping
line amongst its diverse portfolio, the Group has been on more
journeys than most. What may come as a surprise is the nature
of the current journey – to drive a culture of pay for performance
throughout the organisation, starting with its headquarters in
Denmark, where an egalitarian culture often prevails.
This has been the challenge facing Alex Penvern, Global Head
of Group Compensation, Rewards and Executive HR at the
A.P. Moller–Maersk Group, since he joined the team in 2008.
Today, the company can demonstrate a clear link between
greater engagement, differentiated reward, and enhanced individual and corporate performance.
The A.P. Moller–Maersk Group is a Danish diversified conglomerate employing more than
100,000 people in approximately 130 countries. With interests primarily in shipping and oil and
gas, the various business units of Maersk are characterised by the asset-intensive nature of their
operations.
THE STRATEGIC VALUE OF REWARDING
INDIVIDUAL PERFORMANCE
In this world of multimillion-dollar ships and oil
concessions, it is easy to discount the relatively small
cost of remuneration. However, though reward costs
might not be as high on the agenda as they might be
in more labour-intensive industries, the strategic value
of rewarding performance is definitely at the top of the
minds of senior management.
“Given the value of the assets they look after, the
company has high expectations of its leaders – and
also of people at all levels. We believe that they
will work harder, run faster and achieve more if
we differentiate between the best, the good and
the slightly less good”, says Penvern. “So it is not
only absolute performance we reward – we focus
significantly on performance relative to peers”.
ESTABLISHING ONE SCALABLE AND
TRANSPARENT REWARD STRUCTURE
This has not always been the case. Less than five years
ago, rewards in the company were characterised
by discretionary bonuses, often awarded with little
transparency. One of Penvern’s first challenges
was to create a scalable reward structure that was
understandable and could, over time, be rolled out
across the organisation.
The starting point was an executive compensation
structure that focused on a relative distribution that
was arrived at via conversations between the CEOs of
every business within the Group. These conversations
are based on a range of different performance criteria,
happening in an annual session – itself a part of the
performance management cycle. The outcome is a
relative performance distribution of the company’s
highest, successful and less effective performers.
“The company believes that our people are motivated
by this constant striving to do even better”, says
Penvern. “You can never rest on your laurels or spend
too long patting yourself on the back, because you
know how hard everyone else is running. We want
people who thrive in this atmosphere”.
This is reinforced by a carefully considered distribution
of rewards to the highest performers. Since the
introduction of the pay-for-performance scheme, fewer
very high performers are securing a significantly larger
share of the bonus on offer.
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