In the fast-paced, highly competitive telecommunications industry, T-Mobile is shaping its perks to attract and keep the brightest talent, says Nicola Sullivan
As the UK’s fourth-largest mobile phone network operator based on revenue, T-Mobile is holding its own in what is a fast-paced competitive marketplace. During its 15 year history, the UK network, which was rebranded after being acquired by Deutsche Telekom in 2002 from One 2 One, has seen the mobile phone become an accessory most people would feel lost without. T-Mobile has 16.8 million customers for its UK network, which is also used by Virgin Mobile. But this is not an industry where players can be complacent. After rapid growth, the market has become saturated, which sets new challenges for providers as they battle to win customers away from rivals.
In the UK, T-Mobile’s financial results for the third quarter of 2008 have been hit by factors such as tough competition, a weak sterling exchange rate and regulatory intervention in the market, which placed a cap on what mobile phone companies can charge for roaming services. T-Mobile’s third quarter revenue fell by 6.7% year on year, despite reporting record customer growth and adding 96,000 contracts to its network in the same period.
To boost customer numbers further, T-Mobile is pushing more sophisticated technology, such as greater capacity for mobile downloads. In the coming months, it also plans to increase the scope for customers to download music and images onto phones, and get them to buy into 3G technology.
As part of T-Mobile’s efforts to outshine its rivals, such as Orange, Vodafone and O2, the network is focusing on delivering excellent customer service. Reward manager Robert Cross believes that a competitive benefits package will play a crucial part in achieving this by helping to engage and motivate staff.
He is hoping that by giving a greater emphasis to reward in the UK, T-Mobile will not only be able to make a difference to customer service levels but also achieve its aim of securing a place in the Sunday Times’ Best Companies to Work For list in 2010.
Financial performance aside, reward has been identified as one of T-Mobile’s most important business priorities for the UK this year. It is launching a People Matter Most programme, which is designed to help manager become well informed about the firm’s benefits and engage with employees more effectively. During the first quarter, managers will be given extensive training in benefits, salary management and administration practices to ensure they are well placed to answer any staff queries about pay and benefits.
“If we look after our employees properly and they feel invigorated and supported doing their job, what they pass on to customers should mirror that,” says Cross.
“Essentially, happy employees equal happy customers. A huge amount of work is now going into this. We are focusing on the role of the people managers. Historically, I think our people managers have spent too much time on being technology experts and not enough time focusing on employees.”
T-Mobile aims to ensure its managers are closely involved in helping staff to understand the firm’s business objectives and how their performance contributes to these, as well as how they will be rewarded for their efforts. Managers will also be involved in employees’ quarterly individual objective setting sessions and performance reviews.
“Every people manager should be able to explain to every employee why they are getting paid X amount and why, after each performance review, they are getting X amount of pay increase and X amount of bonus,” says Cross.
Last year, T-Mobile restructured its bonus arrangements so that rewards were handed out quarterly, instead of annually, and the measurements for both individual and company performance were more closely aligned with the business, giving greater recognition to positive behaviour and corporate values.
“We have done this because a year is probably too long in the lifecycle of telecommunications,” says Cross. “Things move so quickly that the goalposts have already moved after 12 months, which is why we are continually setting new objectives every three months or so.”
Employee recognition will remain high on the agenda this year, with a revamped recognition scheme being rolled out in the first quarter. The new scheme will follow the format of the firm’s existing programme, which enables employees, managers, directors and managing directors to nominate staff for awards. However, going forward, there will be a greater focus on instant reward, and high achieving employees could be in line for big-ticket bonuses such as a holiday.
“I want the organisation to live and breathe recognition,” says Cross. “If someone does something that should be recognised, both people managers and employees should flag up that person.”
Healthcare benefits Another priority for the new year is the integration of T-Mobile’s healthcare benefits, including its occupational health services, employee assistance programme (EAP) and private medical insurance (PMI). Its main aim is to get the three providers of these benefits to liaise and offer staff a more seamless service. The onus will be on the service provider to point an employee toward other healthcare perks, if appropriate.
Cross says T-Mobile will also be looking at ways to increase the cost-efficiency of its PMI scheme, which is offered through its flexible benefits plan. This may involve negotiating a new deal with providers. Thefirm is also considering offering employees access to a free health screening service.
But the changes do not end there. The network is also planning to make changes its fleet as part of ongoing efforts to ensure the safety of its employees. Cross is looking at reducing the lease period on company cars from four to two years, giving staff the chance to change to a newer car more frequently.
There are also plans to increase the range of models employees can choose from.
T-Mobile already provides in-car driver training and online driving risk assessment, which are aimed at changing drivers’ attitudes and behaviour. In 2007, the company introduced computerised risk-assessment equipment into the vehicles of its 200 highestmileage, highest-risk business drivers.
One benefit that doesn’t need revamping, says Cross, is the firm’s defined benefit (DB) pension scheme, which is available to all staff.
“If people were to leave T-Mobile and they were in the pension here, they would have to increase their basic salary significantly to match the value of the pension,” he says.
Despite the turmoil in the world’s financial markets, which has had a heavy impact on final salary pension schemes, pensions manager Mark Young says T-Mobile’s plan will remain open for the foreseeable future.
“The trustees have an 80-year time horizon on their cash-flow projections, so what happens in the very short term is almost immaterial,” he says. “Even if there is an equity fall in the very short term, that may or may not be outdone by a bigger fall on the liabilities side, because these tend to be bonds-driven. We keep a careful eye on things but, in reality, does a fall in equities really hit you? It would only hit you if you were 100% invested in equities.”
Ensuring T-Mobile staff understand the value of the pension scheme has been a challenge, however. Last year, financial education seminars were held at T-Mobile sites across the UK in a bid to highlight the value of the scheme, as well as of other perks, to staff.
In addition, benefits roadshows have also been organised to promote T-Mobile’s offering. The firm has also introduced total reward statements, provided by Watson Wyatt, which have been tailored to detail the value of each employee’s overall reward package.
Further communication opportunities arise at the renewal of the firm’s flex scheme, when letters are sent to employees’ home addresses and all staff are given an in-depth guide to company benefits. “The real challenge for us now is to push the benefits out there and make sure staff have a good understanding of the perks we operate,” says Cross.
He adds that during a recession, when budgets are tight, it is even more important for employers to maximise the effectiveness of their benefits by ensuring they have a strong communication strategy and perks are tailored to their workforce.
“Any increase in spend will always be challenged, but provided it is in the interest of the business, we will spend the money,” says Cross. “It is about getting maximum value for the benefits that are relevant for everyone’s lifestyle and making sure our employees know about these benefits and fully understand what they mean to them.”
Cross also wants staff to buy into the brand. “It is about getting not just the employees to be advocates of the brand, but getting their friends and relations to use [TMobile’s] handsets and service.”
CASE STUDY: Key role in employee relations
In the 15 years he has spent with T-Mobile, Ron Eyre has worked in its retail stores on the shop floor and taken on project management roles before accepting his current position as lead representative of the firm’s National Employee Council. Eyre, who is also a member of the Deutsche Telekom European Works Council, is responsible for managing the interactions between employees and members of the senior management team. He is involved in setting any new redundancy terms, Transfer of Undertakings (Protection of Employment) (Tupe) transactions and any employee consultations. Eyre’s favourite perks are the defined benefit pension plan and the company car scheme. “I have the benefit of greater knowledge because of my role, so I think my favourite benefit is the pension,” he says. “Our car benefits scheme is better than the majority of companies because of the choice and ability to trade up and trade down. The flexibility in it is brilliant.”
What are the benefits?
Defined benefit scheme, which is available to all employees and new joiners.
Healthcare and wellbeing
- Private medical insurance available to all employees through flexible benefits. Employees can choose whether or not to add their spouse.Dental cash plan.
- Employee assistance programme.
- Subsidised gym membership.
- Health assessments. Car Company car and cash allowance, provided to all employees with a business need and higher-grade staff. Family-friendly policies
- Flexible working arrangements offered on an ad-hoc basis
- Parental and maternity leave.
- Childcare vouchers. Holidays Staff are entitled to 25 days a year, with the option of trading up or down by five days. Canteen/catering Cashless canteen offered through salary sacrifice arrangement.†
- Half-price T-Mobile line rental for employees and their friends and relatives.†
- Quarterly bonus scheme.
- Performance-related pay.