Malcolm Douglas, Remuneration and Benefits Manager at British American Tobacco explains to Annie Hayes why his strategy focuses upon making sure the benefits systems does not cause any ‘unpleasant odours’; scratch and sniff for more on his enlightened approach.
HR Zone Q1: Why should delegates attend your talk on getting to grips with the latest benefits trends?
Douglas: I am a Chartered Fellow of the CIPD and I have over 30 year’s experience in this profession. I think my case study will be interesting, it is certainly up to the minute if not currently a finished product. Delegates will be able to hear the real-life experiences of an R&B manager, just trying to meet the needs of customers without adding too much to employment costs.
HR Zone Q2: The talk comprises a case study – what are the particular benefits challenges that British American Tobacco has faced?
Douglas: The case study is about our attempt to draw together three elements of our benefits package: Total Reward Statements, Flexible Benefits and Voluntary Benefits.
HR Zone Q3: How big is BAT and how many locations does it operate from?
Douglas: Although BAT is a large company with 80,000+ employees in 160 countries, the UK operation is less than 2,000, but it includes the group Head Quarters & three other locations.
HR Zone Q4: What are the most popular benefits at BAT?
Douglas: Pensions, share schemes & healthcare are the most popular benefits because they are provided free by the company. In the flexible benefits programme the popularity is as follows:
- 1. Holiday sell
- 2. Holiday buy
- 3. Dental insurance
- 4. Employee critical illness insurance
- 5. Retail vouchers
- 6. Childcare vouchers
- 7. Home computer initiative
- 8. Travel insurance
- 9. Cycles2work
- 10. Roadside assistance
- 11. Flexphones
- 12. Partner critical health insurance
- 13. Wine club
- 14. Tax return service
HR Zone Q5: How aligned is the benefits strategy at BAT to business goals?
Douglas: Pay & incentives are very closely aligned to business strategy with direct links between performance and business unit results and reward. Benefits play a supporting role with the mixture of standard benefits such as pensions and holidays augmented by flexible and voluntary benefits. These are designed to support the corporate brand and give employees flexibility in their choices.
HR Zone Q6: Does BAT measure the return on its benefits investment? And if so what is it?
Douglas: No it doesn’t.
HR Zone Q7: Is there any link between benefits and productivity?
Douglas: No. I think pay and benefits are hygiene factors not motivators. They create a stink when they go wrong but they cannot demonstrate a positive link with business results. I concentrate on making sure my benefits systems do not cause any unpleasant odours but getting my communication of them as effective as I can and my employee survey results indicate that I am successful in this. Any correlation between benefits and productivity is usually spurious, unless benefits are given as rewards or withheld as punishments. Our benefits are not used in that way.
HR Zone Q8: What are the particular legal and tax complications of the benefits strategy at BAT?
Douglas: Healthcare benefits are provided free of tax to the employee. We use the full range of tax efficient flexible benefits, see list above, plus NIC savings on some of the other components of the flexible benefits programme.
HR Zone Q9: Do benefits have any bearing on BAT’s recruitment and retention successes?
Douglas: Labour turnover was about 3% in 2005. The introduction of flexible benefits has not reduced labour turnover significanty, because it has been low for a long time. I think this is due to our high pay practices. and some of our core benefits such as non-contributory pension scheme, free healthcare scheme and free staff lunches.
HR Zone Q10: Who has ownership for the benefits programme at BAT?
Douglas: HR.
HR Zone Q11: What are you final thoughts on the benefits challenge of today’s labour market?
Douglas: Making the most of the pensions opportunities for employees, this means providing employee financial education programmes.
Douglas will be speaking at the Employee Benefits Exhibition and Conference being held at the Armitage Centre, Manchester from 26th to 27th April 2006.
