Abbey’s takeover by Santander has enabled the bank to broaden its horizons when it comes to benefits, says Nicola Sullivan
Abbey is one of few banks that appear to be weathering the economic storm. It is part of the Banco Santander Group, the fifth largest bank in the world by profit. Having snapped up Abbey in 2004, the Spanish bank took advantage of volatile share prices in the financial services sector to acquire Alliance & Leicester in September this year, and then weeks later snapped up part of the collapsed bank Bradford & Bingley.
This latest deal saw the transfer of Bradford & Bingley’s £20 billion retail deposit base along with 2.7 million customers, 197 retail branches and 141 agencies to Abbey, strengthening its retail customer deposit base and franchise. In a further move, Santander injected £1 billion into Abbey as a show of support of the UK government’s banking bailout plan.
Just prior to the autumn banking crisis, Abbey reported strong results for the six months ending 30 June 2008. Pre-tax profit had risen to £571 million, up from £476 million in the same period last year. Its total operating income for the same period had also increased from £1,368 million last year to £1,469 million this year.
But things have not always been easy for the organisation, which prior to its takeover by Santander, had found its transition from building society Abbey National to a fully-fledged commercial retail bank challenging. Santander’s takeover of Abbey came at a time of hardship for the bank, which had reported losses of £686m for 2003, and brought it much-needed financial security helping it move back into profit in 2005.
So when Maria Strid, head of reward, joined Abbey as a reward consultant shortly after the bank’s takeover, she had to hit the ground running.
Not long after joining the firm, Strid took on the role of international mobility manager, providing her with the challenge of integrating Santander’s executives into the business when they arrived from Spain on short-term assignments to manage the merger. This involved handling the payroll process and benefits queries for Santander’s chief executive officer and other executive colleagues. Strid’s role then evolved to include responsibility for benefits generally, an area which she developed in the following few years, before becoming head of reward at the beginning of 2008.
Strid explains that when she first took on reward at Abbey, the emphasis was on maximising the value of the company’s existing perks, as it was not then in a position to invest more in benefits. “Abbey was [originally] a building society and part of Santander’s plan was to build it into a full retail bank. A lot of the focus was on organisational design. We also knew Abbey was in the red when [it was] taken over so there was not a case for us to invest a lot in new benefits [at that time]. It was about getting back to basics and making sure we got value out of the benefits we had.
“Historically, Abbey had also focused very much on cash compensation rather than other benefits so we were looking at promoting and introducing voluntary benefits such as childcare vouchers,” says Strid.
Following the merger, Abbey’s retail banking arm and other parts of its business underwent significant change. For example, its voluntary benefits and worksite marketing arm, Abbey at Work, withdrew from the market on commercial grounds, stating that the cost of promoting financial services in the workplace was no longer justified by the amount of new business coming in.
As the bank has undergone changes, so has its branding and logo. In around 2001, Abbey lost its famous umbrella and replaced it with bubble imagery. Then when it became part of Santander, Abbey adopted the group’s flame logo, reinforcing its link to the bank.
Strid explains that the external company branding underpins her approach to benefits provision as it is an important part of the bigger picture when it comes to reward.
“Quite often, when you think about what it means to come to work for Abbey or Santander, a lot of it is about the external brand [of the organisations]. In terms of identity [in the benefits] on offer, you build that based on the external brand. You then internalise it, which has been a challenge,” she says.
One of the ways Abbey has unified its brand and benefits is through the introduction of an online benefits platform, Letabbeybenefityou.com, which was introduced for its 16,000 employees in July. The company-branded platform gives staff access to discounts on retail products and services as well as information on the benefits available to them. The first new perk to appear on the platform was the employee sharesave scheme, launched to staff in September.
Employees who take part in the scheme, provided by Yorkshire Building Society, can contribute between £5 and £250 a month over a three or five-year savings period. Participants are entitled to a 20% discount on the starting price of shares.
This is the first time a sharesave scheme has been introduced in the Santander Group and it is linked to the Spanish bank’s share price. Santander also awarded Abbey employees 100 free shares each when it took over the bank in 2004 as an incentive to stay. It adopted a similar strategy with Alliance & Leicester staff when it acquired the bank this year. A further 100 free shares were also given to Abbey staff when Santander celebrated its 150th anniversary in 2007.
“We are investing more in benefits [now]. One of the things we have done this year, [which] was a huge step for both Santander and Abbey, was to introduce sharesave. This is the first [scheme] of its kind in the group and Abbey is the only company in the group where employees [are given] the option to buy shares at a discounted price,” says Strid.
She adds that it was considered crucial for Abbey’s sharesave scheme to be delivered using a robust and eyecatching communications campaign, especially as people’s confidence in shares has fallen in recent months. Staff were educated about the scheme through workshops, while leaflets featuring ladybirds with three or five dots to represent the saving periods, were also distributed. In addition, a televised advertisement was broadcast to employees, featuring an Italian chef describing how all elements of the scheme worked.
The campaign paid off, with 40% of Abbey’s staff taking up the perk. Strid believes the promotion of the scheme made it accessible and took the scare factor out of buying shares, which she believes is often created by poor understanding.
Last month, Abbey introduced further benefits when it launched emergency childcare along with out-of-school and eldercare services to help support employees with caring responsibilities. The schemes, provided by My Family Care, were introduced as a result of an employee survey which pinpointed the need for back-up care. The firm also had a business reason for introducing the perk as it is estimated that Abbey loses around £500,000 a year due to parents having to take time off to care for children. Abbey also offers flexible working arrangements to help employees manage their work-life balance.
Being part of a larger group has allowed Abbey’s employees to benefit from a host of other opportunities. For example, Santander operates an exchange programme whereby Spanish-speaking staff in the UK can travel to Spain and work in banks serving the ex-patriot community. “Benefits don’t have to come in the form of monetary value and the exchange programme forms part of the bigger picture of what it means to come and work for Abbey,” says Strid.
For Strid, another important part of the bigger picture is Santander’s extensive corporate social responsibility commitments which have also trickled down to Abbey. These include the Santander Universities Global Division, which connects the bank with academic institutions in Spain, Portugal and Latin America, Russia and now the UK.
Between 1996 and 2006, Santander channelled 500 million euros into the sponsorship of academic, research and technological projects in support of higher education.
Last year, Abbey partnered with several higher education institutions including University College London, the London School of Economics and Political Science, Oxford Brookes, Oxford University and the University of Bath in setting up a similar investment programme in the UK.
Although Strid is proud of the varied benefits package she has been instrumental in creating, she also feels confident that the group as a whole retains and attracts staff on its own merits. She explains: “In terms of attraction, at the moment, we are probably one of the safer banks to work for which all comes down to branding and communication. There are opportunities linked to being part of a bigger group.”
†Maria Strid, head of reward at Abbey, joined the organisation in 2004 as a reward consultant shortly after the firm’s merger with Santander.
It wasn’t long before Strid became Abbey’s international mobility manager. In this role she was responsible for integrating Santander’s senior level executives into Abbey. In 2006, she became its reward manager responsible for employee benefits, before being promoted to head of reward in January this year.
Prior to joining Abbey, Strid worked for Arup, which she joined as a graduate trainee in 1999. She quickly moved up through the ranks and was promoted to the role of HR project co-ordinator in 2000 before becoming a reward specialist in 2001.
At Abbey, Strid is proud of the work she has done to build and develop the reward team.
“I am really proud of my team, and having established a group with diverse skills and backgrounds that works well together,” she says.
Strid regards the introduction of Abbey’s sharesave scheme as another big achievement, and one she believes will further improve employees’ commitment to the bank. The next big challenge that awaits Strid and her team is integrating the approximately 1,400 staff transferring from Bradford & Bingley into Abbey.
Abbey at a glance†
Abbey is the sixth biggest bank and one of the largest providers of mortgages and savings in the UK based on profit and market share.
Abbey’s roots date back to 1849, when the National Freehold Land and Building Society was established. In 1944, it merged with the Abbey Road Building Society to form Abbey National, which became the first building society to achieve plc status when it was floated on the London Stock Exchange in 1989. Since 2004, Abbey has been part of the Santander Group, the fifth largest bank in the world by profit. Abbey’s head office is in London and it has regional offices in Milton Keynes, Bradford, Glasgow and Belfast.
Abbey has a diverse workforce made up of 65% female employees, according to data taken in 2007. Just 12% of staff are aged over 50 years and the average length of service for employees is just under seven years.
Case Study: Flexible working is a boon
Jonathan Bush, e-commerce support adviser, has worked for Abbey for two and half years. He is responsible for providing technical support to the firm’s online banking customers.
Bush says one of the best things about working for Abbey is that he can take an extra week of leave through the firm’s flexi-holiday scheme to train with the Territorial Army (TA).
“A lot of people I’m in the TA with do not get this sort of benefit so they have to give their employers weeks and weeks of notice,” he says.
Bush also takes advantage of his staff credit card and loan, which have lower than typical interest rates. He is impressed by the firm’s flexible working policy which allows him to take time out to care for his daughter. “Work has been brilliant. I can take the time to sort out my family life. When I come back to work I can simply make up the hours,” he says.
What are the benefits?
Employees who joined Abbey after 4 March 2002 can join its stakeholder pension plan. This has matching employer contributions of between 3% and 8% depending on age, provided employees contribute at least 3% of base salary.
Free private medical insurance (PMI) for middle management employees and above, who can add dependants to the scheme.
PMI available to other staff members as a voluntary benefit.
On-site dentist based at the bank’s Milton Keynes office.
Dental cash plan and healthcare cash plan, discounts on glasses, contact lenses, eye correction treatment and sunglasses all offered as voluntary benefits.
In-house gyms at some sites and corporate discounts at a number of UK gym chains.
Employee assistance programme.
Allowances according to job need or status.
25 days as standard, with middle managers and above receiving 30 days. Everyone can buy or sell a maximum of five days.
Subsidised canteen and coffee shops available at main offices.†
Sales staff take part in an incentive scheme and employees in non-sales roles can work towards an annual performance bonus.
Special rates, discounts and extra features on Abbey’s own products including mortgage rates, credit card, insurance products and loans. Share incentive plan and sharesave scheme for employees.†
Options include childcare vouchers, season ticket loans, financial support services and retail vouchers.