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Business International Gallia, 10 4 03

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Merloni Elettrodomestici / Indesit Company HR Processes and Tools. Performance Management, Talent Management and Rewards Strategies

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Business International Gallia, 10 4 03

  1. 1. Francesco Picconi www.merloni.com [email_address] The Rewarding Challenge Milan, April 10th, 2003
  2. 2. Merloni Elettrodomestici at a glance Headquarters Fabriano - Ancona (Italy) Production facilities 16 plants in 7 countries Annual sales 13 m appliances Major Brands 2 global: Ariston, Indesit 3 regional: Scholtès, Stinol, Hotpoint Commercial presence Subsidiaries in 21 countries European market share 15% Turnover 2002   2.5 bl € (2003 > 3.0 bl€)
  3. 3. Merloni Elettrodomestici: a success story 20 Times in 20 Years Focus on household appliances, moving from Italy to “Big Europe” Today we have a well balanced product mix equally split among cooking, cooling and washing Today we have a well balanced geographical presence and market shares From the 300 th to the 3 rd position in Europe by market share Turnover, Mln. € Merloni Elettrodomestici was created in 1975 from the Household Appliances Division of Industrie Merloni, a company founded in 1930 by Aristide Merloni. It Is the youngest and most successful multinational in the sector 1975 2001 250 500 750 1,000 1,250 1,500 1,750 2,000
  4. 5. Our vision To be the European leader in producing innovative solutions, to create day after day, the quality of time
  5. 6. Growth = focused organic growth + good acquisitions + fast integrations <ul><li>Quality: </li></ul><ul><ul><li>CAGR (00-02, Rev ) = 20% </li></ul></ul><ul><ul><li>CAGR (00-02, EBIT ) = 42% </li></ul></ul><ul><li>Basis: </li></ul><ul><ul><li>Acquisition choice and integration capabilities </li></ul></ul><ul><ul><li>Good mix of organic and acquisition growth </li></ul></ul>Organic Growth Organic Revenues’ Growth, M EUR 1999 2000 1,419 2001 2002 182 138 240 CAGR 11.7% <ul><li>Maintaining momentum </li></ul><ul><li>Optimizing scale effects </li></ul><ul><li>Exploiting synergies </li></ul><ul><li>12 acquisitions in 25 years </li></ul><ul><li>1/3 international </li></ul><ul><li>Experience in acquiring and integrating </li></ul>Acquisitions History Acquisitions Total Growth 2000 - 2002 Organic Acquired The “ One Single Company ” concept (1 organization, 1 structure, 1 manufacturing network, …) enables Merloni to realize synergies from acquisitions fast and efficiently 53% 47%
  6. 7. Merloni inside Entrepreneurial Simple & online Even if listed is a family owned company driven operationally by the entrepreneur until 1996 Entrepreneurship is in the DNA Flexible, quick and fast in decision taking. Adapting quickly to continuously changing scenarios Young The youngest company in the sector. Young in spirit. Growth is an obvious objective
  7. 8. Organization and HR are critical for performance and growth Annual Performance Appraisal Annual Salary Reviews Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec First Half Year Performance Review Objective setting HR Performance Review HR Commitee organization overview HR Commitee people overview HR Organization Review Aug B u d g e t 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr
  8. 9. Eagle Solid Better use Backbone Not for Merloni
  9. 10. REWARDS SYSTEMS: OUR JOURNEY ITALY-CENTERED BASED ON FROM ONE COMPANY. ONE COMMON COMPENSATION APPROACH <ul><li>AGE </li></ul><ul><li>CONTRACTUAL LEVEL </li></ul><ul><li>POINTS </li></ul><ul><li>MARKET SALARY SURVEYS </li></ul>EUROPEAN / GLOBAL BASED ON <ul><li>ONE GLOBAL GRADING LINKED TO MARKET SALARY SURVEYS </li></ul>TO } ITALY } ABROAD } WORLDWIDE
  10. 11. <ul><li>ASSIGNMENT OF ABOUT 140 ROLES TO ONE BAND AND ONE GRADE (WITHIN THE BAND) </li></ul><ul><li>3 BROAD BANDS BETWEEN THE C.E.O. AND THE CLERICAL ROLES </li></ul><ul><li>ABOUT 14 GRADES TO MAP THE MERLONI ROLES WORLDWIDE </li></ul><ul><li>DIRECT LINK OF THE GGS WITH SALARY SURVEYS IN ALL MERLONI COUNTRIES </li></ul><ul><li>HR ROLES IN THE ASSESSMENT PROCESS: </li></ul><ul><li>TIMING : GGS UP AND RUNNING BY END OF JUNE 2003 </li></ul>THE GLOBAL GRADING IN A NUTSHELL … <ul><li>HR DIRECTOR FOR EXECUTIVE BAND </li></ul><ul><li>K.A.’S FOR MANAGERS AND PROFESSIONALS </li></ul><ul><li>O.D. MANAGER AS THE SYSTEM ARCHITECT </li></ul>
  11. 12. The Merloni Grading System ONE COMPANY SYSTEM FOR PROMOTIONS / COMP & BENS PLANNING / DEVELOPMENT TOP EXECUTIVES MANAGERS PROFESSIONALS JUNIOR PROFESSIONALS (IF GRADUATE) OR CLERICALS (IF NOT GRADUATE) DIRIGENTI QS Q PROXY TO THE ITALIAN CONTRACT SHORT GRADUATES ENTRY LEVEL GRADUATES ENTRY LEVEL LONG TERM INCENTIVE PROGRAM STOCK OPTIONS TARGET MERIT CAR MEDICARE MBO 3 PROFESSIONAL BANDS - EXECUTIVES - MANAGERS - PROFESSIONALS SPECIAL BONUSES TOP
  12. 13. MERIT POLICY: THE APPROACH GUIDELINES FOR ITALY (AGE / CONTRACT / POINTS) COUNTRY BASED DECENTRALIZED APPROACH FOR ABROAD (MARKET SALARY SURVEYS) SELECTIVE IN ITALY (BUT COVERAGE HIGHER FOR PROFESSIONALS THEN FOR MANAGERS!) VERY TACTICAL ABROAD FROM THE CHALLENGE: KEEP THE FLEXIBILITY TO MANAGE TALENTS IN A MORE STRUCTURED FRAMEWORK TO <ul><li>COUNTRY BASED POLICY DRIVEN BY </li></ul><ul><li>MERIT BUDGET </li></ul><ul><li>COMMON GRADES </li></ul><ul><li>CLOSER LINK TO PERFORMANCE </li></ul><ul><li>(GUIDELINES BY GRADE </li></ul><ul><li>AND PERFORMANCE LEVEL) </li></ul><ul><li>- POTENTIAL </li></ul><ul><li>CLEAR RULES OF THE GAME… </li></ul><ul><li>… BUT ALLOW FLEXIBILITY </li></ul><ul><li>TO MANAGE TALENTS </li></ul>
  13. 14. MBO / TARGET / SPECIAL BONUSES THE CHALLENGE: REWARD PERFORMANCE LINKED TO COMPANY / GROUP / INDIVIDUAL GOALS & SPECIAL GROUP EFFORT AD HOC SPECIAL BONUSES AD HOC COMMERCIAL INCENTIVE PLANS COMMERCIAL 10% TARGET SSC SHARED SERVICE CENTER 15% TARGET PURCHASING PURCHASING 15% TARGET PROFESSIONALS 20% MBO MANAGERS 30% MBO EXECUTIVES BASE SALARY (TARGET %) INITIATIVE GRADE
  14. 15. STOCK OPTIONS <ul><ul><li>PLAN LAUNCHED INTERNATIONALLY IN 2000 </li></ul></ul><ul><ul><li>TODAY IS AIMED AT: * EXECUTIVES (100%) </li></ul></ul><ul><li> * MANAGERS (58%) </li></ul><ul><li> * HI-POT PROFESSIONALS (10%) </li></ul><ul><ul><li>PRICE: AVERAGE OF THE MONTH BEFORE THE ASSIGNMENT DATE </li></ul></ul><ul><li>- VESTING PERIOD: * 50% OF OPTIONS EXERCISABLE AFTER 2 YEARS </li></ul><ul><li>* 100% OF OPTIONS EXERCISABLE AFTER 3 YEARS </li></ul><ul><ul><li>OTHER FEATURES: * MINIMUM 1 YEAR OF SENIORITY IN THE COMPANY </li></ul></ul><ul><li>* EXPIRATION AFTER 10 YEARS FROM THE ASSIGNMENT DATE </li></ul>THE CHALLENGE: BIND KEY MANAGERS AND HI-POT PROFESSIONALS TO MERLONI, LINKING A SIGNIFICANT PART OF THEIR COMPENSATION TO MEDIUM / LONG TERM COMPANY RESULTS
  15. 16. Thank you ! The Merloni HR Gardeners

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