Total Rewards Program Design for General Mills

Introduction and Organizational Overview

General Mills is a major food producer with a stable business selling packaged foods to supermarkets. The company earned $17.9 billion in revenue in 2014, and on that took home $1.8 billion in net income (MSN Moneycentral, 2015). According to its 2014 Annual Report, the company sees its strategy as "putting the consumer first." The company competes by connecting with consumers and developing "deep insight into what they like to eat, where they shop for food and how they approach cooking" (General Mills, 2014, p. 1). The company notes that the industry in the developed world is mature, with just 1.5% growth in the U.S., slower than overall industrial sales growth. Input costs, however, were up 4%, creating a challenging operating environment. The Annual Report's explanation of the company's business indicates that General Mills is primarily a marketing-driven company, developing products and utilizing channels suited to getting goods to the customer.

This paper examines the key human resources needs for General Mills. The company has around 43,000 employees spread across a large number of divisions. In addition to marketing expertise, the company needs to have substantial production capability in order to handle the misalignment between rising input costs and sluggish sales growth. By identifying the human resources needs of General Mills, it is possible to design a total rewards program that complements other human resources strategies in order to meet the company's overall objectives. The total rewards program is the central focus of this paper and reflects the rewards strategies best aligned with the overall performance goals of General Mills.

General Mills is one of the leading food producers in the United States. Its domestic market share in major categories ranges from 9.1% in frozen pizza (Totino's) to 70% in refrigerated baked goods (Pillsbury). General Mills' organizational chart is complex. There are senior executives for product categories (e.g., meals, frozen foods), for geographic regions (e.g., Canada, Australia/New Zealand), and for functions (e.g., supply chain, compliance, investment). Jacqueline Williams-Roll is the Senior Vice President for Human Resources Operations. She has performed HR duties across several divisions — supply chain, finance, marketing, and organizational effectiveness (General Mills, 2015). This indicates that centralization of the human resources function at General Mills is limited.

One of the core values of General Mills is "innovation in all aspects of business," and another is "investing in, respecting and developing employees." These two core values are the most relevant in the development of a total rewards program. Investing in and developing employees reflects a strategy where the company finds good people, provides them with training and upward mobility, and seeks to retain those in whom it has invested. Innovation is particularly interesting because, in many mature industries, innovation is not a priority; however, General Mills launches dozens if not hundreds of new products every year. Many will ultimately not succeed, but maintaining an innovation pipeline of new products is one of the key ways for this company to succeed and keep its product lines fresh.

General Mills also relies on employees who can learn quickly, think creatively, communicate effectively, and work as part of a team. Part of this comes from hiring well, but part will come from taking employees who have the right attributes — hard work and a willingness to learn — and training them in the rest. The major challenge for General Mills will be to ensure that this is done consistently throughout the organization, despite the fact that there are many different companies each doing their own hiring. There may also be a mix of different organizational cultures, as well as chain-of-command issues given the complexity of the organizational chart.

Total Rewards at General Mills

Total rewards is a human resources concept that reflects the reality that people work for a company for a variety of different reasons. Each reason represents a "reward," and the mix of these rewards is a key driver of what type of employee a company attracts, its retention rate, and other human resource metrics. Ultimately, a total rewards program should enable the organization to meet its strategic objectives. Employees look for the following categories of rewards from their employers: compensation, benefits, work-life balance, performance recognition, and development.

General Mills' core values hint at the latter two being especially important, while the first two are standard at any company. Work-life balance receives less emphasis in the company's literature. The head of HR is a good example of how career opportunity and development function within the company. Ms. Williams-Roll held progressive positions, taking advantage of the large number of divisions and departments within General Mills to build her internal résumé to the point of reaching the executive ranks. By allowing employees to move across divisions, General Mills provides ample development opportunity while also encouraging innovation. Employees who have exposure to a large number of operating groups can transfer ideas between those groups effectively, view problems from different angles, and apply solutions developed in one division to creatively solve problems in another. By allowing people to forge diverse development pathways, the company facilitates knowledge transfer, cultivates a common organizational culture, and ensures that talented employees never lack for opportunity — all positive factors that contribute to the company meeting its overall performance objectives.

Another area worth discussing is the benefits package. General Mills uses an annual enrollment strategy, which helps the company keep costs down and allows employees to choose from a range of options. This is managed on a centralized basis so that each business unit operates consistently with respect to the benefits program (Kofski, 2012). The benefits offered are not unusual — standard medical, dental, and insurance packages are available.

A third area is performance and rewards. The company ties its performance management to rewards in an explicit way, so that employees can see a direct link between their performance and the rewards they receive. This element of the total rewards program is also developed centrally but implemented at the division level (Kofski, 2012). The performance and rewards process is annual; however, there is an organizational imperative to deliver rewards as close in time as possible to the event that precipitates them (Kofski, 2012). Rewards include signing bonuses averaging $3,360, and 100% of new hires receive a performance bonus in their first year, averaging $2,070 (Business Week, 2007). Signing bonuses and education reimbursement programs are designed to help the company maintain a highly educated workforce and attract new college graduates, keeping the workforce fresh and innovative. General Mills noted in its 2014 Annual Report that it needs to remain in tune with the food preferences of millennials, who number 80 million. Attracting millennials is the most effective way to develop new food products for that generation.

Segmentation of the Workforce

There are a number of ways to segment the workforce. With 43,000 employees, General Mills has many workers involved in basic tasks such as food production; however, the company is fundamentally a marketing organization and needs a high level of system-wide innovation in order to continuously launch new, successful products. The workforce therefore has a diverse range of motivations. For many production workers in particular, wages, benefits, and stability are the key drivers. For those on the marketing and product development side, the key drivers are development opportunity and performance recognition. For such workers, pay is less central because they are the architects of their own careers — if they want more pay, they work harder and earn promotions.

There are thus two distinct groups of employees. The second group — the "strivers" — may itself be divided between those at higher levels seeking a pathway to the executive suite and those at lower levels who simply desire opportunity. The company promotes what it calls a "glass door" policy, meaning it provides opportunity to those who seek it, knowing that this serves as a motivator. The divide between the two groups broadly reflects those in transactional roles — repetitive jobs that must be executed to perfection — and those in more transformative roles. Marketing and innovation staff in particular need a high degree of creativity in order to understand the markets they serve and find ways to serve them effectively.