Incentive Structure in Joint Venture - Mercer Marsh Benefits

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Incentive Structure

Due to the legacy divisional structure, employees in the MMB joint venture may carry the same job responsibility but follow different designation and progression path depending on their operating company. For example, a MMB professional hired by Marsh will follow the AVP → VP → SVP promotion path while the same role hired by Mercer will follow the Consultant → Project Leader → Principal path. Employee performance evaluation is done at different timing and frequencies and follows different format and methodologies. Bonus and annual salary increment are still at the discretion of the individual operating company and it is unclear how much the dotted line manager has influence on one’s performance rating. The complete lack of integration of incentive system between the two operating companies hinders the formation of a proper matrix structure and discourages employees to coordinate across boundaries and collaborate as one team.

Organizational Culture and Informal Structure

As a broking firm, Marsh is traditionally sales-focused and its client facing employees are obsessed with the idea of generating more leads and converting more prospects to clients. As a consulting firm, Mercer differentiates itself as a solutions provider that brings clients knowledge and insights. This difference in culture leads to many informal networks among individual contributors and managers in the joint MMB organization. Lunch groups or Friday night drinks are often done just among members of the same operating company. Furthermore, Marsh strictly demands employee’s “face time” at office while Mercer allows employees to work from home when necessary. The difference in mind set and working style often leads to unnecessary conflicts and delays to critical internal initiatives, aggravating the poor coordination and resource efficiency problem.

Recommendation

Making the Matrix Work

To move MMB to a truly matrix organization, top management at both Marsh and Mercer need to reinforce the common vision among employees and coordinate closely to overcome the difficulty of implementing a matrix structure. Time and resource should be invested to launch a change initiative aiming at establishing a “One MMB” identity among employees of both operating companies. Both new and existing employees should undergo trainings or re-education to internalize the objectives of the joint venture and their aligned roles and responsibilities such that they could work together to provide uniform client experience.

On top of management efforts, the following measures should be taken to sustain a newly formed matrix organization:

Standardizing Incentive Structure and Performance Evaluation Method

Regardless of operating company and designation, MMB employees having the same generic role and responsibilities should be evaluated by a common set of metrics and appraisal method. Metrics should be designed to encourage teamwork and achievement of common goals of a matrix organization while retaining the market and customer focus of a divisional organization. As much as possible, rewards and salary increments should tie to the successful accomplishment of MMB’s common objectives and less to the interests of stakeholders outside the joint venture (For example, dotted line manager of an MMB employee’s own operating company).

Collocation / Proximity

Regardless of operating company, MMB employees should be physically seated on the same office floor to promote direct and open communication. As of today, in all countries where both Marsh and Mercer operate, MMB employees still sit on different floors together with colleagues of the same operating company. Traveling upstairs and downstairs for meeting could happen very frequently within a day, to the extent that a lot of employees are using web conference to communicate just to save the time on climbing stairs. Also, a common work-from-home policy should be enforced to allow all MMB employees the same mode of communication.

Facilitating Encounters across Boundaries

Last but not least, MMB management should promote job rotations across the two operating companies to avoid the formation of excessive informal networks that could hinder the cultural integration within the joint venture. A common intranet or internal social media community should be introduced so that worldwide MMB employees could liaise, exchange and establish tighter bond over technology.

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Appendix

Marsh and McLennan Companies (Parent Company)

http://www.mmc.com/

Marsh (Operating Company)

http://asia.marsh.com/

Mercer (Operating Company)

http://www.mercer.com/

Mercer Marsh Benefits (Joint Venture Organization)

http://mercer-marsh-benefits.marsh.com/