Case study: Discounts and extra holiday go down well at Virgin Media
Dan Ret is head of revenue assurance at Virgin Media, which means he and his 26-strong team ensure customers are billed only for the services and usage they have received. When Virgin Media was formed in 2007, he moved over from Virgin Mobile, where he had spent three years as a revenue assurance manager.
Ret makes significant use of Virgin Media’s Tribe card, which enables staff to obtain discounts at restaurants, high-street shops and on holidays. “It even includes mundane things like discounts on insurance,” he says.
Another popular perk is My Rates, which includes discounts of up to 50% on Virgin Media’s products and services, and the associated Mates Rates scheme, which passes similar discounts to employees’ friends and family.
However, Ret’s favourite benefit is the option to buy and sell annual leave, which is part of the organisation’s voluntary benefits scheme. Staff can buy or sell up to five days’ holiday a year. “For me, it helps manage my work-life balance,” he says. “And it is all part of the Virgin ethos: if you treat employees right, they will treat customers right and then the shareholders will be treated right.”
Since being created from a merger four years ago, Virgin Media has been moulding its employee benefits to reflect Sir Richard Branson’s successful business ethos, says Jennifer Paterson
Virgin Media’s employee benefits ethos is intertwined with part-owner Sir Richard Branson’s business mantra: “If your employees are happy, they will do a better job. If they do a better job, the customers will be happy, and thus business will be good and the shareholders will be rewarded.”
That philosophy has been evident in all aspects of the entertainment and communication firm’s business this year, but it was not such plain sailing four years ago when Virgin Media was born out of a merger between Virgin Mobile and NTL-Telewest.
Lucy Otter, director of diversity, employee relations and policy at Virgin Media, says: “From an employee perspective, it was a hard time. We were constantly reorganising. We had a big mix of reward in the generic sense, and it was very important to remember that we were trying to build a platform that we could springboard from in ensuring that we were treating our employees in the right way and giving them choice. We had this legacy of a paternalistic approach, whereas we wanted to get to an employee understanding of what their options were and being able to make it work for them, instead of being told ‘this is what you have got’.”
Before Virgin Media could get to that point, it was clear it had to stabilise what it already offered, get the basics right, and approach a phase where it could build a streamlined employee benefits package.
The organisation, which celebrated its fourth birthday on 7 February 2011, is a culmination of decades of consolidations, mergers and acquisitions in the UK cable market, which came to a boil in late 2006 with the merger of cable giants NTL and Telewest. In early 2007, the newly formed NTL-Telewest then merged with Virgin Mobile to become Virgin Media.
Branson mantra pervades brand
With all this change and a variety of business focuses, employee bases and reward packages coming under one umbrella, the merger offered a prime opportunity to align all benefits to represent the Branson mantra that pervades the Virgin brand. “We have gone through a significant change programme,” explains Otter.
“We had conflicting policies between NTL and Telewest. They did not align and were not what I would call Virgin. We were trying to create an organisation with a clear brand, but we had various terms and conditions, the same jobs with different titles, and no specific reward framework.”
Its first task, in 2008, was to create a new executive compensation committee. Virgin Media’s staff had come from different environments of bonus payments and variable pay. For instance, NTL had not paid a bonus for a couple of years, while Telewest had. Otter says: “We started looking at the broader reward strategy, and specifically the senior contracts. We felt it was appropriate to ensure we had an aligned position with our senior leaders of the business before we moved into looking at all employees.”
Its next focus, in 2009, was on aligning all the legacy pension schemes carried over from decades of acquisitions, including 23 defined contribution (DC) and four defined benefit (DB) schemes. The DB schemes had been closed to new joiners but were open for future accrual. Three of these were merged into one plan to sit alongside the other remaining DB scheme.
Group personal pension scheme
The DC schemes were all consolidated into a single group personal pension (GPP) plan, which offered matching contributions and opened 1 October 2009. After a vigorous consultation process, the other schemes were wound down to a deadline of 31 August 2010. Otter adds: “We had one GPP scheme for new joiners, and that was the old NTL plan, but we did not feel it was fit for purpose in the long term, particularly with auto-enrolment and the other changes coming in.”
Virgin Media’s sharesave scheme is a further example of its benefits alignment. In the late 1990s, NTL and Telewest staff who had belonged to legacy sharesave schemes had experienced plummeting share prices. “It was important in building Virgin Media to think about employees and ensure they had an opportunity, and sharesave is a great example of that,” says Otter. “It has been about staff benefiting from their commitment and hard work in making the business what it is. It is an investment in employees.”
The sharesave scheme, which matures on 1 July 2011 after a three-year savings period, was offered to staff at a 20% discount in 2008 when the organisation’s share price was £4.92. Employees in the scheme who opted to save more than £100 a month could potentially come away with a shareholding worth £12,988 if they buy the shares under option when the scheme matures. On 24 May, the share price had risen to $31.56.
After two years of preparation, Virgin Media is implementing a united reward and benefits framework. From 1 January 2012, all 12,500 staff will be on the same terms and conditions. “That was the period by which we agreed to phase it in,” says Otter. “So [we are] ensuring we have car allowances that are the same, pay ranges across the business are the same, and bringing medical cover together.”
Attracting and retaining staff
The push to align all benefits under the Virgin Media brand reflects the brand’s value in attracting and retaining staff. Perks such as its My Rates and Mates Rates schemes offer employees, as well as friends and families, discounts on Virgin Media’s products and services. Otter adds: “The organisation constantly changes, it offers lots of opportunity in terms of role and growth, and from a purely reward perspective, it is a hugely competitive package.”
The company spans various sectors, which can make it difficult to communicate all changes to all staff. Its national Voice Forum with 18 representatives from divisional forums sits at the top of a pyramid for filtering communications down to all levels of the organisation. The forum is hosted monthly, with additional bi-weekly phone calls. Otter says: “We have always worked closely with the Voice Forum, and we can now do much more in working with employees in shaping what we do and where we go next. In terms of general communication, that is one of the areas where we have got an opportunity to really change and get staff excited.”
The methods generally used for communication are email, roadshows and The Grill, an interactive online communication tool that is used in consultations. Staff can fire off questions and receive live answers, and there is even a camera feed so employees can gauge the reaction to their questions. Its Pulse engagement surveys are included on the intranet with new questions every two weeks, and information is circulated via text and mobile devices for field-based staff, who make up about 24% of the firm’s workforce.
Virgin Media’s intranet, TouchPoint, is also an important communication tool. “There is a lot of engagement and two-way discussions,” says Otter. “When an announcement goes up, it is left open so staff can comment, then the person who posted it can contact the employee with further details.”
After four years of assembling all the pieces of Virgin Media and aligning benefits and reward to reflect the overall brand, Otter says her team has arrived at a very exciting place. The next step is to create a flexible benefits scheme. “It comes from the fact we know we have got a mixed range of employees,” says Otter. “Virgin Media is about opportunity and supporting the employee the best way we can, and that means individual choice. The Voice Forum has often asked if employees could mix and match a bit more. It has been something to build towards and we want to get out to staff and ask them what they think that might look like.”
As it works towards implementing flex, Virgin Media will continue to focus on aligning employee benefits with its corporate brand, and ensuring that its offerings are united across the business. “The UK cable industry has a chequered history,” says Otter. “We are optimistic about where we are now and where we are going forward. This is outwardly reflected in how we work with staff and with our customers, and how that is reflective of the Richard Branson mantra.
“It has been a challenging journey. We have got a good couple of years behind us now and we are at that place where we can begin to look to the future. And it is totally reflected in the things that we have done. All our work on the reward and benefits side is clearly running parallel to that. It has been about ensuring we feed into that commercial journey and setting us up to be in a very different place.”
Virgin Media at a glance
Virgin Media provides entertainment and communications services to approximately 10 million customers. Its services include broadband internet, television, and mobile and fixed-line telephony.
Founded in 2007, the organisation is the result of decades of consolidations within the UK cable market. In 2006, cable giants NTL and Telewest came together. The following year, NTL and Telewest merged with Virgin Mobile to form Virgin Media.
The company has 12,500 employees. Its head office is in Hook, Hampshire, and it operates at 30 other locations around the UK. Its average length of service is 6.5 years because most staff have joined from legacy organisations.
This year, its primary business objectives and challenges include improving customer service levels, and rolling out the Tivo digital recording system to its customers. In 2010, Virgin Media’s annual revenue was approximately £4 billion.
Career history:†Lucy Otter
Lucy Otter is director of diversity, employee relations and policy at Virgin Media. She started her career as a business analyst in the finance division at Yorkshire Cable in 2000. The organisation evolved into Telewest, then NTL-Telewest in 2006, and finally became part of Virgin Media in 2007.
Otter’s roles have also evolved, with her entering the reward side of the business in 2003. “It was really a result of my history, where I enjoy the financial side of the business, but also the people elements,” says Otter. “My experience in finance provided a good foundation for moving across to reward, which was also a good introduction to the HR agenda and potential to impact the business.”
From reward manager in 2003, Otter’s role evolved into head of reward, head of reward and policy, and, most recently, director of reward and policy.
Of her current post, she says: “The role is about making sure reward is commercially relevant and balancing that with looking after employees and enabling them to be able to make choices about their job, their opportunities, and their reward.”
• Group personal pension (GPP) plan with matching contributions.
• 120 staff remain in legacy defined benefit (DB) schemes.
• Sharesave scheme with a three-year savings period.
Health and wellbeing
• Private medical insurance for all staff.
• Dental plan through voluntary benefits.
• Eye test and glasses for all visual display unit users.
• Employee assistance programme for all staff.
• Income protection for all staff.
• Life assurance for all staff.
• Personal accident insurance for all staff.
• Critical illness insurance through voluntary benefits scheme.
• 25 days, increasing to 28 days after five years’ service.
• Holiday buy or sell, up to five days, in voluntary benefits scheme.
Pay & bonuses
• Variable pay and bonuses at all levels.
• Company car or cash for car options based on business needs.
• Childcare vouchers.
• Loans for seasonal travel tickets.
• Employee discount scheme.
• Discounts on Virgin Media products and services.
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