Allied Electronics Corporation Ltd: Linking Compensation to Sustainability Metrics
Dr. Venter and Venter Junior
Robert Venter, second-generation Chief Executive (CE) of family-owned Allied Electronics Corporation Ltd, considered the pros and cons of more clearly linking the firm's compensation system to sustainability performance. In June 2011, Altron, a multinational headquartered in Johannesburg, South Africa, controlled more than 200 companies in Africa, Europe, the US, the UK, Australia, and the Far East. More than 14,000 employees designed, developed, manufactured, and marketed a range of telecommunications, electronics, power electronics, and information technology systems and products. Having made a clear commitment to sustainable development, Venter was confident that the commitment was shared across the senior management team. However, there appeared to be a higher acceptance in the operating units for meeting financial targets than for meeting sustainability targets. There was a clear difference between Venter and his predecessor, Dr. Venter. Dr. Venter adopted a value-based culture in the company, ensuring that the mission and vision of the company were followed and reviewed after every year. The codes of ethics were maintained and that the company responded quickly to changing external forces and trends. Dr. Venter was mostly the sole decision maker at that time and whatever his decision was, was accepted by the organization. At the time Dr. Venter was in charge of the company, it was mostly bottom-line drive; focusing mostly on profits. No doubt that with the family oriented approach that Dr. Venter had and the sole responsibility that he had undertaken for all decision making made the company soar to new heights. But with the global changes in the corporate world took place and the way corporations did business shifted, a change was needed to handle this change. This was the perfect time that Robert Venter took over the company. He differed from his father in many ways, the biggest being; he concentrated more on sustainable development. He believed that the company should be more transparent and everyone’s views mattered. He created a more participative decision-making process that involved a process by which the idea would float and if the ideas clicked on each level of the process, it would be implemented. This not only empowered employees, but lead to more ideas being generated.
Even though Venter focused more on the sustainability goals of the company, most of the senior managers were still focused on the financial bottom line. With the new process for feeding new idea to the company, Johnston came up with a business case for a carbon footprinting concept. The main idea of this concept was to link the end-goal of a sustainable goal with a tangible success. Johnston set-up to develop a case on the shift from bottom line to sustainable goals and how they were suppose to implement this. The following considerations and steps were performed: * Why they needed the change
* Culture of the organization
* Risks facing the change
* Whether they had the proper systems and the structure for the change * How they would bring about the change in the organization and how to educate the employees about the change The carbon footprinting brought a change for the greater good in the company, the reporting system became more transparent and numbers and reports were being shared and used in different decision making processes. This led to better decision making and found out where the company lacked how proper steps could be followed to make the company having a better standing in its operations. This system also led the company to incorporate broad-based black economic empowerment, which gave a good image to the company in the eyes of the public as well as the government. A compensation plan was drawn up which was based on key performing...