Case study: Airbus flex scheme is ‘fantastic’
Tim Flook, integrator, materials and processes, joined Airbus in 1990. His role in engineering structures requires him to manage the work and deliverables for the A400M military transport aircraft. Flook liaises with chief engineers and architects to ensure the work is delivered on time and to cost.
As part of the company’s management population, Flook values private medical insurance as a core benefit and is also eligible for the flexible benefits scheme.
He says: “When I first heard that the flex scheme was being rolled out to the band five (management) population, I thought it was an absolutely fantastic additional benefit. “And it serves as additional motivation for development of the younger members of the team, and for those who are spiring to move on from their grades and move up within the business.”
Aircraft manufacturing giant Airbus is keen to ensure its staff benefits match its world-class status, says Tynan Barton
Aircraft manufacturing giant Airbus is keen to ensure its staff benefits match its world-class status, says Tynan Barton It is not every day a company can say it has taken on the largest order of jet aircraft in commercial aviation history. But in January, aircraft manufacturer Airbus did just that with a £10 billion, 180-aircraft deal with Indian airline IndiGo.
The deal was followed days later by Airbus’s 10,000th order with a contract from Virgin America for 60 A320 airliners.
Airbus recognises it can only achieve such a strong order book with top-performing employees. Stephen Dumbleton, reward manager at Airbus UK, says the firm’s benefits and reward package, which focuses on recruitment, retention and engagement, plays a vital role in improving staff performance and maintaining standards. “We are not naive enough to think we will achieve all that just with the provision of a good range of benefits, but it certainly helps,” he says.
“We aspire to be top in class for everything we do. We are only going to achieve that through our people, therefore it is very important that we do everything we can in terms of our benefits and reward strategy.”
However, because of the trans-national nature of Airbus, which has its main sites in the UK, France, Germany and Spain and subsidiaries around the world, the UK benefits strategy has to be approved at a European level. This was the case when Dumbleton implemented a flexible benefits scheme, provided by Vebnet, for management employees last summer. Rather than making a decision at local level, he had to get approval from Airbus’s UK board and corporate HR board in Toulouse. “It is very important that the business cases we make are solid and robust,” says Dumbleton.
Flex introduced after feedback
Airbus introduced flex following a market survey and feedback from its management population. Dumbleton’s team ran focus groups involving high-performing managers, which found that the benefits at Airbus did not compare well with other organisations, which had an impact on employee engagement with the business.
“The survey indicated that, in some ways, we had a bit of catching up to do,” says Dumbleton. “Our benefits package was, at best, very traditional, not very exciting. We took on board feedback from our managers because for this population particularly, we found we had a bit of work to do. For our blue- and white-collar populations, we were at an appropriate place, but not for managers.”
With employees staying at Airbus for an average of 13 years, the company does not suffer particularly from high staff turnover, but flex has certainly strengthened its hand when it comes to recruiting and retaining skilled talent.
“Like many organisations, we struggle to get high-calibre engineers because there is a shortage worldwide,” says Dumbleton. “So, with the flexible benefits for this population, we hope to fare better in recruitment of the key talent we are after.”
Another way in which Airbus attracts the highly specialised talent it requires is through its recruitment centre of expertise. With staff frequently moving to different geographical operating areas within the business, Airbus operates a trans-national recruitment platform. As a result, it has a highly diverse workforce: in 2010, 60 nationalities were represented in its UK staff.
Graduate exodus is biggest risk
Newly qualified graduates present the biggest risk to Airbus in terms of talent exodus. But Dumbleton accepts that, after joining a company through its graduate scheme, it is a natural progression for staff to move on after gaining a few years’ experience. To counter this, Airbus ensures high-potential staff are fully aware of what lies ahead of them in their career with the organisation. “The benefits create an aspirational goal,” he says. “We try to make it clear that even though it may be a while before someone is promoted to the next grade, it will be worth the wait.”
Engaging employees with the benefits available at Airbus is a delicate balancing act, using various channels of communication. Dumbleton believes one communication method will never be enough, especially when not all staff have regular access to computers, so hard-copy information is distributed, along with email notices. Airbus also runs an internal television channel, shown on screens around its buildings, which broadcasts company notices and product information, as well as news about benefits.
However, Dumbleton acknowledges that although the communication is highly effective, too much information can have a negative effect. “Occasionally, we will send [information] to home addresses,” he says. “For example, with flexible benefits we sent a newsletter to homes, but we would not want to do that very often because the worse thing we could do is start irritating our employees.”
Dumbleton recognised that the success of flex, for instance, would depend on the power of communication. “We knew that it would either succeed or fail on the quality of our communication. We held roadshows, sent newsletters and e-cards, but the main thing has been to have ongoing feedback.”
On the back of this feedback, Airbus introduced a salary sacrifice computer scheme for its 2011 flex plan, in which the item is paid for from deductions from an employee’s pre-tax pay over a three-year period. “A number of people remembered the previous home computing initiative (HCI) scheme and asked about it,” says Dumbleton. “Listening to feedback is absolutely key.”
Airbus’s most popular benefit, bikes for work, is also a tax-efficient scheme. Dumbleton attributes its success to employees’ interest in fitness, rising transport costs and the desire to reduce carbon footprints. “It is a very good tax-efficient scheme,” he says. “We have improved the scheme over the years, and the company has no interest in making money through it. Everything is saved for tax efficiency, and VAT [savings] and such are passed on to the individual.”
Increased awareness of bike scheme
Each time the biannual bike scheme opens, more than 300 people subscribe. When the bikes-for-work scheme first launched, it was taken up by only 20 or 30 staff. But Airbus progressively made enhancements, including signing up with provider Cyclescheme to give staff more choice about where they could choose their bike, and the number of staff joining the scheme increased significantly.
To increase awareness further, Airbus sends a letter to every eligible employee who does not belong to the scheme. “Over the last 18 months, we have had over 1,000 people [take it up], which is an incredible percentage of the population,” says Dumbleton. “It shows that when any particular benefit grabs the imagination, as this one has, then marketing it is easy.”
Dumbleton says that although the scheme runs smoothly, this is largely because of its maturity, as well as awareness of the tax changes brought in by HM Revenue and Customs. “There have been a number of changes for bikes for work brought in by HMRC, so we need to be mindful of that and address it in the future to stay completely compliant with regulations,” he adds.
Airbus also offers a range of other voluntary benefits, but recognises that there is always room for improvement. “We know that, whereas some of our benefits are very successful and very popular, such as bikes for work, we have other benefits where we know it is a key objective to engage all of our workforce, so they understand we are providing good opportunities,” says Dumbleton.
As well as encouraging regular dialogue with employees through emails, noticeboards and Airbus television, Dumbleton works with trade unions to ensure that feedback from employees is acknowledged.
“When we get constructive feedback, we act on it, because my target is to have a range of benefits that are appropriate, or even market-leading benefits for all of our employees, covering all of our populations,” he explains.
As major orders continue to fly into the aircraft manufacturer’s books, Airbus recognises the importance of developing a strong benefits strategy to maintain its standing as an employer of choice, and build its market position on the strong foundations of a world-class workforce.
Airbus at a glance
Airbus designs and manufactures aircraft, with a particular strength in the commercial, passenger aircraft sector. Its products range from the A318, its smallest aircraft, up to the A380 double-decker super-jumbo. A new aircraft being developed is the A350, with production starting this year.
Airbus is also prominent in the military sector, where it is manufacturing the new A400M transport aircraft for air forces and governments around Europe.
Headquartered in Toulouse, France, Airbus was created in 1967 when the French and German governments started to build the European Airbus aircraft, which was launched in 1969. In 1970, Airbus Industrie, including the UK’s Hawker Siddeley, was formed to provide a sales, marketing and support network for Airbus customers. British Aerospace, which took over Hawker Siddeley, joined the consortium as a full partner in 1979.
In 2001, Airbus became a fully integrated single company. The European Aeronautic Defence and Space (EADS) company owned 80% of shares, while BAE Systems took 20%. In 2006, EADS acquired the 20% from BAE Systems to become the sole owner.
Latest figures from EADS, published last March, show revenues of €42.8 billion, with an order book of €389.1 billion. The Airbus division saw revenues of €28,067 million and an order book of €339,722 million.
Airbus UK has 10,000 staff in the UK, of 60 nationalities. The average age of staff is 41 and it has a mostly male workforce. Stephen Dumbleton, reward manager, says: “We are trying to get more females in the workforce, particularly in engineering.”
Career history: Stephen Dumbleton
Stephen Dumbleton was appointed reward manager at Airbus UK in 2008. Since then, his key achievements include implementing a flexible benefits scheme for UK managers, and a revised grading structure for this group to ensure alignment with the rest of Airbus. He says: “When we spoke to our managers, we found that as they are different genders, at different points in their career with different commitments, all wanted something different. This is when we got the idea that flexible benefits was the way to go.”
Dumbleton has also introduced a range of new benefits, including a salary sacrifice bikes-for-work scheme and discount opportunities. Since joining Airbus in 1989, his other positions have included HR business partner (procurement), compensation and benefits manager, and HR adviser. Dumbleton was previously personnel officer at the Welsh Development Agency, and unit personnel officer at Hillingdon Health Authority.
The benefits at Airbus
• A BAE Systems defined benefit (DB) scheme, which is closed to new members. Most common is an employee contribution of 9.29% and an employer contribution of 20%. There is currently a cap on Airbus’s contribution towards the employer contribution, with BAE Systems paying the balance of 7.5%.
• A BAE Systems hybrid defined benefit and money purchase scheme. Employee contribution is 4% and employer contribution 18%.
• An Astrium EADS defined contribution scheme open to new joiners.
• Private medical insurance offered as core for managers.
• Health cash plan available on voluntary basis for all staff.
• Health screening available through flex.†
• Environmentally friendly salary sacrifice car scheme.
• Cash allowance scheme for executives.
• Childcare vouchers.
• 25 days as standard.
• Additional days off after 10 years of employment: one day after 10 years, two days after 15, and three days after 20.
• Fitness facilities and sports clubs provided by the British Airplane Welfare Association.
• Retail discount scheme.
• Bikes for work.
• Salary sacrifice computer scheme.
Pay and bonuses
• Annual bonus paid to management staff.
• Company-wide bonus for all other staff with the amount depending on Airbus’s overall performance.