Vodafone operates in the cut-throat telecoms sector and as it broadens its range of services, it needs more flexibility around perks, says Debbie Lovewell
The mobile phone industry is a hotbed of competition. Consumers now face an almost daily barrage of information on cost-saving deals or the latest handsets as retailers vie to win business away from one another in what has become a saturated marketplace.
Simply providing the means for customers to make and receive phone calls and text messages is no longer enough as mobile operators branch out into new areas of communication, such as fixed-line, mobile internet access and broadband services, in the battle to retain their share of the market and stake their claim as the leading mobile telecommunications provider. Many have also resorted to price cuts in a bid to both win new customers, and keep hold of existing business.
Vodafone, likewise, has used diversification and price cutting to shore up its position. Tough competition led to a slight drop in pre-tax profits for the year ending 31 March 2007 to £8.75bn and after one-off costs were deducted, the company posted a pre-tax loss of £2.4bn. However, group revenue for the quarter ending 30 June 2007 grew 7.5% year-on-year to £8.3bn.
Keen to continue to deliver new products and remain competitive, the telecoms giant has just unveiled MusicStation, an unlimited music download service to mobiles for £1.99 a week to add to its fixed-line, mobile and broadband services.
The move fits with its a three-year ‘Winning in the market’ UK business strategy. Alan Thomas, head of reward and employment policy, explains: “[It] is about us retaining our customers, growing our customer base, driving revenue and about how we move into different markets. We’re primarily known as a mobile operator but we’re looking to move into total communications. It’s about broadening our business out into different revenue streams.”
This move into new markets will inevitably affect its staffing needs as employees with different skill sets will be required in some areas. The last few years, therefore, have seen several significant changes to Vodafone’s benefits package as part of its strategy to recruit and retain top-performing staff. One such change was the launch last year of its flexible benefits scheme, which is funded through salary sacrifice and salary deduction, and is intended to enable the company to offer a package that employees can tailor to meet their needs.
“We worked with Watson Wyatt to introduce a package that included healthcare, dental, retail vouchers, critical illness insurance and [so on]. That really was our first step on a journey of starting to give greater choice and flexibility around the package that we offer. Over 70% of our employees work in customer-facing roles in call centres or in retail shops. We have quite a diverse employee base. What we had was quite a standardised benefits package, which [didn’t] meet the needs of everybody in the organisation. Moving into different markets and trying to attract different types of talent, we needed to ensure our benefits package was suitable. We don’t just recruit from other mobile phone operators, we’re in a broader market as well, so we [need to] attract people out of those businesses to come to work for Vodafone,” says Thomas.
Following the scheme’s launch, Vodafone’s quarterly employee survey has registered sustained improvement scores around benefits. However, Thomas admits that there is still some work to do to improve employees’ perception of the flexible benefits scheme, particularly around its communication. “Post-implementation, we did some focus groups. The interesting thing we found was [that] what a significant number of people wanted, we already offered. What it told us was we were not communicating effectively enough about what we currently have available, so that’s our strong drive over this 12-month period. What we did was slightly too complex so we’re looking at how to simplify the messages [and make] our written material briefer, so it’s more engaging,” says Thomas.
This will be particularly important as the scheme moves into its second year, with the addition of new options such as a healthcare cash plan, income protection, travel insurance, personal accident insurance and the ability for staff to buy extra holiday.
With such a diverse workforce spread over a wide geographical area, however, reaching all employees is a challenge. “We have people in 348 shops and seven call centres [and] people who are based at home, so you can’t use a one-size-fits-all approach. Therefore, we have to segment out our audience to target different communication channels to get those people,” explains Thomas.
Chief executive’s blog
As may be expected from a communications company, Vodafone uses a range of channels to get messages across to staff, besides the traditional paper materials and emails. Its chief executive officer Arun Sarin, for example, posts a monthly blog on the company intranet site, while his message is also sent to staff using Vodafone’s technology through its 3G mobile phones, so they can either listen or watch his video presentations through their handset.
Vodafone’s employee survey, which is carried out among sample populations, has also been used to identify areas of falling satisfaction levels among staff. Two years ago, feedback indicated that company recognition of employee efforts was not scoring well, prompting the organisation to revamp the way it recognises employees’ achievements.
As a result, it introduced several measures which were designed to boost employee recognition, including Vodafone’s peer recognition scheme, Legends. All staff can nominate colleagues for an award and a panel of trained voluntary assessors from the company’s main employee base, excluding corporate management, then interview each person who has made a nomination in order to gain more information about the nominee. Taking this into account, the list of nominees is reduced to 300 finalists, from whom the 100 winners, or Legends, for that year are selected. Last year, 1,500 nominations were made.
The winners of last year’s scheme were informed of their success by a member of senior management in front of colleagues in their workplace. Each winner and a guest were taken on an all-expenses paid trip for four nights in a five-star hotel in Cape Town.
Back at work, employees also receive visible acknowledgement of their achievement throughout the year, for example, by being given a star to hang in their place of work, and through announcements at internal conferences.
Thomas explains that the scheme helps to support other recognition plans within the business. “What we find is it has knock-on effects. It’s not just about one recognition activity as from that awareness, [staff] are utilising our other recognition processes and recognition is becoming more a part of everyday culture within Vodafone UK. That helps drive our overall engagement.”
He adds that this has tangible business results. “We’ve gone from having local recognition activities to putting in place some national processes, but it still is incumbent on line managers to embrace recognition because actually, a ‘thank you’ or a ‘well done’ within the team is as strong recognition as becoming a legend. But what the Legends programme has done is bring recognition to the forefront of the thinking and the culture of Vodafone UK. We strongly believe in the link that engaged employees give great customer service and great customer service delivers fantastic business results.”
Vodafone also uses its commercial sponsorship activities to engage staff with the business and provide additional perks. To tie in with its sponsorship of the UEFA Champions League football competition last year, for example, it held a company-wide five-a-side football tournament. The winning team then received a trip to Athens to watch the final of the Champions League.
To ensure staff who didn’t wish to play football weren’t left out, the company also ran a photography/journalism competition alongside the matches. The best photographer and match reporter also went on the trip to Athens.
The company runs similar initiatives around its sponsorship of live music events.
“That drives greater awareness around our sponsorship and staff engagement. It’s very much about getting employees to be advocates of our products and services, and championing the brand,” says Thomas.
In such a highly-competitive market, these type of initiatives may just make all the difference for the firm.
Alan Thomas, head of reward and employment policy at Vodafone, began his career working in sales and distribution for brewing company Bass.
After five years with the organisation, he moved on to First Leisure, which operates nightclubs, ten-pin bowling centres, piers and hotels, and took his first HR position. From here, he moved to car retailer Evans Halshall, before joining Vodafone as a personnel manager for its retail stores. “Up until that time, the regulator hadn’t allowed the mobile operators to sell direct to customers, you had to go through third parties. But the regulations had changed so Vodafone had just bought three mobile phone retailers and at that time, we were rebranding them as Vodafone, trying to integrate the people into Vodafone and put in standard processes. I came in on the back end of that, so that was a pretty exciting time to join the firm,” he says.
Thomas continued working as a generalist HR manager until he moved into his current role approximately two years ago, when he decided to specialise.
He is particularly proud of two key achievements during his time at Vodafone: the launch of the company’s recognition schemes, and changing the way in which stores were staffed while working in the retail side of the business. “When we first bought them, the business model at the time was [that stores] were staffed by full-timers, everyone came in at nine o’clock and went home at 5.30. We moved to a totally different staffing model getting in part-timers. We had to go and find those part-time workers who wanted to work in key hours during the middle of the day when you’re busiest, [and work out] how to attract those people and retain them,” Thomas explains.
What are the benefits?
Defined benefit scheme closed in 2006. Defined contribution plan open to all employees from the first day of their employment. Company contributes one-and-a-half times what employees put in, up to a maximum of 5% employee contributions and 7.5% from the company.
Private medical insurance paid for senior managers. Available through flex for all other employees. Income protection, dental cover, critical illness insurance and personal accident insurance all available through flexible benefits scheme.
Provided to staff according to job need or on a status basis with a cash alternative also available.†
Minimum of 23-28 days a year, depending on the business area. Employees are also entitled to an additional day for each five years’ of service up to a maximum of three extra days. Holiday can be sold through flex scheme.
Company-provided shuttle buses to all sites and local station for staff at Newbury head office. Free travel on local buses in Newbury area. Financial incentives for head office staff who travel to work in an environmentally-friendly manner. Cycle-to-work scheme for all employees.
Case study: Recognition in store
Jacqui Quin is a store manager, who has worked for Vodafone for three-and-a-half years.
Last year, she was one of the 100 winners of the organisation’s Legends peer-recognition programme, which is intended to recognise the efforts of top-performing staff. Quin cites this as one of the greatest benefits she has received from the company. “We all went off to for an all-expenses paid trip to South Africa in February. It was brilliant. They couldn’t have done more for us.” She also valued the way in which the regional manager made the announcement of her achievement with a presentation of flowers and champagne in front of her colleagues. “It just set me off on a high for the rest of the day.” During her time with the organisation, she has also won the title of store manager of the year. Quin believes such recognition schemes have a number of advantages for the organisation. “When [it] can do something like that for you, it puts [it] streets ahead of other companies,” she explains.
She also values some of the company’s other benefits, such as the discounts that are available through its benefits booklet, for example, on entrance to attractions such as Alton Towers. “It’s great when you’ve got two kids to keep entertained over the summer,” she says.