Carlsberg UK is focusing on the health of its workforce to put maximum effort into the battle for business.
The continuing economic uncertainty has not been good news for the beer industry despite the popular belief that many people still like a drink when times are tough. This year, Carlsberg UK closed its 186-year-old Tetley brewery in Leeds, which resulted in more than 150 redundancies. The Danish firm said it was no longer feasible to operate two major breweries in the UK amid increasingly challenging market conditions caused by falling consumption and higher duties on beer.
Carlsberg UK has taken action on a number of fronts to meet these challenges. Since closing the Leeds brewery, the firm has invested £40 million in its brewery in Northampton, which it has kitted out with all the latest technology to increase efficiency. Julian Daley, reward manager at Carlsberg, says: “The biggest challenge this year is trying to continue growth while managing a move to one brewery in a very challenging market.”
The Carlsberg group’s latest financial results demonstrate the challenging market, showing a 5% fall in operating profits to DKK (Danish krone) 4.7 billion (£552 million) in the first half of 2011, compared with DKK 5 billion in 2010. Its net profit for the first half of this year was DKK 2.2 billion, compared with DKK 2.7 billion in 2010.
To achieve success, the company is working to ensure it gets what it needs from its workforce. It is in the process of resetting the targets employees have to meet to achieve their annual bonus by better aligning individual achievements with business performance.
Under Carlsberg UK’s proposals, which have yet to be finalised, each employee’s annual bonus will be based on how they perform against a number of measures. These include personal and business targets outlined in one-to-one meetings with managers, as well as stretching targets, which change according to business needs.
“Performance management should be an annual cycle that happens year after year and is aligned to the organisation’s business goals,” says Daley.
New bonus structure
Under the new bonus structure, the maximum bonus an employee will be able to achieve will remain the same as under the firm’s current arrangements. These are set at 6% of salary for the general workforce, 12% for senior managers and 24% for executives.
Staff health and wellbeing is an essential part of Carlsberg UK’s push to maximise productivity and boost profits. Last month, it used Water Wellpoint kiosks to collect data about employees’ weight, hydration quota, body mass index, body fat content, heart rate and blood pressure.
Daley says: “We will use that data to decide what our plans and objectives are for 2012. If the data is telling us people need to exercise more, then our focus next year will be on getting people to be more active. If it says obesity is an issue, we will look at nutrition. I am very keen that we base everything on the data we have rather than a hunch.”
To do this, Carlsberg UK has also been measuring the activity levels of employees in different job roles so it can provide tailored advice on nutrition. “Someone like myself will have low activity levels because I am sat in front of a PC all day,” says Daley. “My dietary requirement will be completely different to that of one of the firm’s draymen, whose activity levels will be vastly different from mine.”
Carlsberg will also make healthy options easier to spot in its canteen, as well as ensuring that managers and employees are properly informed about healthcare benefits, including its employee assistance programme (EAP) and healthcare trust.
To promote its benefits package to employees, Carlsberg uses total reward statements for the entire workforce. It offers both paper and online total reward statements, detailing each individual’s entitlement to cash and non-cash perks.
Flexible benefits booklet
After replacing its previous 24-page flexible benefits booklet with an A5 sheet, the firm increased take-up of its flex scheme by 22% year on year. “It was very punchy and there were just two or three sentences for each benefit rather than half a page in an A4 booklet,” says Daley. “We found it really hit home with people. With the A5 sheet, they got things very quickly. If they wanted to drill down and get more information, it was all on the Your Carlsberg site.”
In July, the firm announced that following its flexible benefits enrolment period in May, almost one-third (31%) of its 1,700 employees had chosen to take up flexible benefits. The top flexible benefits chosen by staff this year were bikes for work, childcare vouchers, give-as-you-earn and holiday purchase.
Other perks offered through flex include a health cash plan, a dental plan, pension, private medical insurance (PMI), shopping vouchers and travel insurance.
Carlsberg UK also offers a voluntary benefits scheme that gives staff access to a wide range of discounts at retailers, travel agents, gyms and other suppliers, as well as information on childcare vouchers and discounted PMI.
The tax-efficient perks it offers tie in with Carlsberg’s aim to be as cost-effective as possible when providing benefits.
“We have done loads of stuff without spending a lot of money,” says Daley. “In the past we used to have a beer allowance, a pension and then, after that, we were struggling in terms of benefits.”
One of the next big projects for Daley and his team will be complying with the 2012 pension reforms, which include auto-enrolment and compulsory contributions. The company currently operates a defined benefit (DB) pension scheme, which was closed to new joiners a few years ago, and a group personal pension (GPP), to which the firm matches employees’ contributions. The general workforce contributes 3% to receive a 6% contribution from their employer, while senior managers pay in 5% and receive a 10% employer contribution.
Planning for pension reforms
Carlsberg UK plans to maintain these contribution levels once the pension reforms come into effect. It will work with Buck Consultants to tackle the administrative challenges relating to compliance, and is particularly concerned about the opt-out process and the requirement to re-enrol employees every three years.
“We are making contributions over the minimum levels [required by the legislation] and the GPP is open to everybody,” says Daley. “Our biggest problem will be managing the opt-outs and the administration around opting people back in.”
With a number of major reward initiatives already in place and several more in the pipeline, therefore, Carlsberg UK is determined to ensure staff are motivated and equipped to help its drinks remain popular.
This link with wider corporate objectives helps to support the activities of other business areas such as its marketing strategy, which it has ramped up. “We have got some significant marketing spend from now to the end of the year,” says Daley. “We have done a deal with Sky for adverts that are going out on its three main channels.”
Career history: Julian Daley
Julian Daley, reward manager at Carlsberg UK, has been with the firm for 15 years, but he did not start out in its HR team. He initially worked in the finance department for seven years before being asked to manage the firm’s company car arrangements, which were being outsourced to a third-party provider.
“We used to buy all our cars,” says Daley. “It was going from old-school traditional fleet management, so we had two guys managing the fleet, and that was outsourced to our provider. We sold all our cars and leased them back.”
Following that project, Daley gradually took on more responsibility for other benefits.
He now looks after Carlsberg UK’s pensions, health and wellbeing benefits, pay and bonuses, and its voluntary and flexible benefits schemes.
Carlsberg Group at a glance
In September, the Carlsberg Group celebrated the 200th birthday of its founder, JC Jacobsen, who created the
brewery in Denmark in 1847. He named the firm after his son, Carl, and the Danish word for hill (bjerg) on which the brewery was built. Jacobson had realised the marketability of German beer, which influenced the development of his own particular brew.
Jacobsen had to rebuild the business after the brewery was destroyed by fire, but went on to make pioneering discoveries in his field. In 1875, he created the Carlsberg Laboratory, where the pH scale was established, along
with the first pure yeast. Both were offered freely to the brewing industry and still form the basis of all modern lagers.
While Carlsberg’s lager may still be similar to the original brew, the business itself has undergone massive change.
The Carlsberg Group is now the world’s fourth largest brewery group, competing in northern and western Europe, eastern Europe and Asia. It employs 41,000 people and operates more than 500 brands, including Carlsberg, Tuborg, Baltika and Kronenbourg 1664.
But the Carlsberg Group is finding the current economic environment challenging and has seen operating profits fall by 5% to DKK (Danish krone) 4.7 billion (£552 million) in the first half of 2011, compared with DKK 5 billion in the first half of 2010.
The benefits at Carlsberg
• Defined benefit pension scheme, closed to new joiners.
• Group personal pension (GPP) plan available to all staff with matched contributions according to seniority.
Health and wellbeing
• Health screening.
• Bikes for work.
• Health cash plan.
• Dental insurance
• Healthcare trust with varying cover levels according to seniority.
• Company car scheme open to employees who travel more than 12,000 business miles a year.
• Employee car ownership scheme open to all employees who have to drive on business.
• Cash allowance open to employees who do not expect to cover 12,000 miles a year.
• Share incentive plan open to all permanent employees.
• 34 days (including bank holidays) a year as standard.
• Additional leave can be bought through the flexible benefits scheme.
Variable pay and bonus
• Annual bonus linked to performance. The general workforce can earn a maximum of 6% of salary, senior managers up to 12% and executives a maximum of 24%.
• An annual allowance of free ale, lager and wine produced by Carlsberg.
Employee case study: A winning draught of benefits at Carlsberg UK
Steven Barry, a team member for brewing and processing, plays a key role in managing Carlsberg UK’s brewing processes. He has worked for the firm for almost 10 years and is responsible for commissioning new equipment,
training other staff and writing operating procedures.
“There is a great bunch of guys to work with and a good management team,” he says. “I do not think there are many employers in the brewing industry that give the benefits that Carlsberg does.”
Barry’s most valued perks include childcare vouchers, the bikes-for-work scheme and private medical insurance.
“The childcare vouchers save me quite a bit of money,” he says. “I also use the bikes-for-work scheme. It has got me back out on my bike. I use the private healthcare as I am getting older and my muscles cannot keep up.”
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