ING DIRECT adopted a rigorous performance management process, built out its pay-band structure, introduced new training and development programs and designed a realistic rewards strategy.
ING DIRECT reinvented banking in September 2000, and in the process rose to from a crowd of over 12,000 banks to become the 24th largest bank by assets (21st by deposits) in the US. In seven years of leading Americans back to saving, ING DIRECT faced a major challenge: how to maintain a high performance culture and stunning growth while adding discipline to its pay practices and starting leadership development initiatives. And, it had to accomplish all this without compromising the edgy, entrepreneurial culture aimed at reinventing the banking world.
ING DIRECT adopted a rigorous performance management process, built out its pay-band structure, introduced new training and development programs and designed a realistic rewards strategy.
The results were right on the money: a disciplined approach to pay; establishing a continuous learning environment; meaningful job evaluations; and a performance-driven culture—brand intact Further, after one year of using the performance evaluation tools, HR surveyed the bank’s leadership team and associates. “Everyone embraced it,” says Rick Perles, ING DIRECT’s Head of HR “We take performance management seriously. It is employee driven and builds on an individual’s strengths. Every senior executive takes this exercise seriously. We definitely walk the talk when it comes to performance management.” Other benefits include:
- The ability to compare jobs country to country in the nine countries where ING Direct operates
- A framework for identifying and developing future leaders
- Having the luxury to fill many job openings internally
Establishing pay practices with teeth
With more than 5 million account holders and over half of the country’s $120 billion in online deposits, ING DIRECT is the nation’s largest direct bank. In fact, without a single brick-and-mortar branch, ING DIRECT zoomed from zero assets to $70 billion. ING DIRECT is a subsidiary of ING, the Dutch-owned global financial services company, which serves more than 15 million customers in Canada, Australia, France, Spain, Italy, United Kingdom, Austria and Germany.
Launched around the time of the dotcom bubble burst, ING DIRECT began by hiring from the gut—into an unstructured environment. There was limited discipline, and a lack of alignment in rewards. While the bank did have six pay bands, “there was no compensation structure to support them,” says Perles.
Hay Group helped ING DIRECT adopt a performance evaluation system with a Web-based tool for performing evaluations, mid-year reviews, and annual goal-setting. “I’ve built four or five of these in my career,” says Perles. “Nothing is as good as this one.”
Part of the compensation review process involved educating managers and executives. Managers were trained no how to make pay decisions and how to talk about performance and compensation. They were shown their respective pay budgets, encouraged to spend their budgets wisely, and asked to show some real variation, i.e. rewarding the best performers and truly differentiating pay.
Executives learned to take a hard look at people, particularly in senior level roles, to calibrate their compensation. This also provided opportunities to discus talent management issues and make realistic pay decisions that impact the business.
Hay Group helped ING DIRECT transform itself from a follow-your-instinct culture to a methodological one—and eventually to a culture in which executive assessments and leadership development is expected, accepted, and routine.
“Walking the talk”
With Hay Group’s assistance, the bank moved to a nine-band structure with salary ranges and location differentials. Today, every ING DIRECT job is slotted so that functions, pay range and rewards for performance can be easily understood.
At the end of 2006, Hay Group reviewed the compensation system to ensure it was performing well and that the people who were contributing most to the business were compensated accordingly. Because the business was growing, Hay Group recommended adding pay grades to the bands. “The ability to expand the system was built in at the beginning,” says Perles.
Further, Hay Group conducted a survey of ING Direct’s global HR practices to identify strengths, find opportunities for improvement, and compare the bank to the world’s most desired companies. According to Perles, the survey showed that while ING Direct global was committed to its goals and its customers, and that its employees understood the bank’s strategy, it was still weak in leadership development. “We began working on that—having clearly defined leadership competencies,” he says.
As the organization has matured, Hay Group helped introduce formal succession planning, executive assessment, organizational development, and leadership training programs.
People and the structures to support them are embraced at ING DIRECT. “HR has been transformed from an administrative and transactional focus” Perles explains. Today, it drives a performance management culture. According to Perles, “It starts at the top of this organization with our President and CEO, Arkadi Kuhlmann. Our vision of leading Americans back to saving is not just a slogan—our associates truly care about people.”
