Nokia Corp. successfully implemented a new corporate-wide compensation plan last year in just a matter of months, thanks to intensive planning and communication, a human resources  director said April 30 at the 2013 WorldatWork  Total Rewards Conference in Philadelphia.

In 2011, Nokia’s chief executive officer sent a memo that the company needed to change its compensation program. The company’s compensation and benefits team worked quickly to devise a new pay strategy that would emphasize pay for performance.

The team began by creating focus groups to uncover opinions about the existing pay program and received extremely negative feedback, said Brian Miller, Nokia director of global benefits. “It did reaffirm that we struck a nerve,” Miller said.

The next step was creating three teams: A human resources leadership team, which would develop the pay strategy; a leadership team, which included upper management; and the personnel committee.

Throughout the process, the human resources team had support from top management on down, Miller said. In addition, upper management remained consistent in its messages about the project, which helped to build support and understanding among mid-level managers and  employees.

Communication was the most critical component of implementing the new pay plan, Miller said. In addition to meeting with upper management, the human resources met with union representatives and with work councils abroad to discuss the new pay program.

 Most importantly, mid-level managers had to understand what the new plan was about, Miller said.

 “We agreed we had to get managers on board first,” Miller said. “Once the emails are sent out and the meetings are over, the employees will go to their managers with questions.”

The timeline for the new pay plan was short: Approval was given in September 2011,  the concept was introduced to managers by mid-November, and employees were told of the changes in late November. The new pay system was launched in January 2012.

A year later, the plan has proved a success, said Lynn Miller, human resources director on variable pay at Nokia. Employees still have an annual performance review, but there is a check-in each quarter for each worker to track progress and address concerns.

Employees who were rated as exceptional performers received the differential pay, which was more than the amount given to about 85 percent of employees who were rated average, a category known as “valued performance.” Those with below-average ratings received no incentive pay, which was a departure from past Nokia practices.

“There is a view that we have shifted the organization,” Miller said.

By Laime Vaitkus