B&Q keeps reward simple

Simplification has been at the heart of B&Q’s HR strategy over the past year as part of the organisation’s efforts to help staff understand and appreciate the value of their benefits and, ultimately, to boost take-up.

The move is aligned with B&Q’s business objective to simplify its pricing model in response to the retail price wars that have been preoccupying many of its competitors. This has involved introducing set product prices instead of temporary discounts.

Janet Mckenzie, reward manager at B&Q, says: “We are trying to make HR easier for the business and to make benefits information easier for staff to find and understand.”

Mckenzie has focused on a number of major projects since joining B&Q in June 2013 from The Body Shop, where she was international reward, policy and mobility manager.

Annual bonus plan redesign

She has redesigned B&Q’s annual bonus plans, simplifying their messaging and design to make them easier for staff to understand. “If we have a bonus scheme that staff do not understand, then it is probably not as useful as it could be,” she says.

Until the end of 2013, B&Q ran three bonus schemes: a company profit share plan, a management bonus plan and a store team bonus plan, each with its own criteria and payout levels.

For example, for the company profit share plan to pay out, a company-level profit target had to be hit and staff had to meet certain performance criteria, whereas the management bonus plan was based on company-level sales and profit.

Mckenzie says: “We questioned why we were not having the same targets in place across the board, so we worked to bring those plans together.”

The company profit share plan and management bonus plans have been integrated into one scheme called ’The annual B&Q bonus’, which is based on more streamlined criteria.

“When we are talking to an employee about their bonus opportunity, it is now a lot easier to explain what the opportunity is and what the plan measures are,” says McKenzie.

But she acknowledges the challenges of assessing the impact of plan changes, which she is yet to do. “Bonus schemes are a challenge for everyone, in terms of proving a direct link between a bonus scheme and performance,” she says. “If anyone in the industry has cracked that, I would love to hear from them.”

Reward package review

The bonus plan redesign has been part of a comprehensive review of B&Q’s reward package, including all staff pay and allowances.

Mckenzie says: “It has been about running the package through the prism of making HR easier and ensuring that everything is as clear as it can be and that we are in line with the marketplace.”

The reward package review is also aligned with B&Q’s ‘Building a better B&Q’ strategy, which aims to recognise staff performance and loyalty and celebrate employee success.

Recognition scheme launch

Accordingly, Mckenzie has launched a new recognition scheme, which aims to motivate and champion staff.

The ‘Everyday thank-you’ scheme, which has been rolled out across the organisation in recent months, has been designed to help staff focus on, and become aligned with, corporate values. These are based on the ethos that the B&Q workforce is one big family that runs the business as if it were its own and treats every pound as if it were its own, puts customers at the heart of everything it does and has a can-do spirit and makes things happen.

Mckenzie adds: “Managers have a stock of thank-you badges and cards on which they can write the positive behaviours they have seen to reinforce these.”

The scheme feeds into B&Q’s new quarterly ’star performer’ programme, which awards outstanding staff performance with cash, gift cards or dinner. There is also an annual recognition awards ceremony that recognises the employer’s 30 top performers, who each receive £1,000 and an extra week’s holiday.

Long-service award fairness

In its reward review, B&Q also assessed the fairness of its package, particularly whether escalating payment levels in line with employees’ length of service was appropriate.

Its employees’ average length of service is seven years, but the range extends to 41 years, with the oldest employee aged 89 and working as a store assistant.

The employer concluded that long service awards are fair and so it continues to run its long service programme, which rewards staff with anniversary badges and cards, extra holiday after 10 years’ continuous service and a cash award after 20 years’ service.

Workplace savings campaign

Somehow, Mckenzie has also found time to work with B&Q’s parent organisation, Kingfisher, on its workplace savings strategy over the past year.

The group’s ‘Saving for your future’ campaign, launched in November 2013, is designed to engage employees with the organisation’s trust-based defined contribution pension scheme, provided by Zurich.

B&Q contributes 2% for staff who contribute 1% of their salary and then matches employees’ contributions up to 7%. Thereafter, the employer pays 10% for employees who contribute 7% and 14% for employees who pay in 8% or more.

The organisation has produced a series of short videos to help staff understand a range of pensions-related topics, such as annuities and investment choices, as well as an iPhone and Android app featuring pensions-related games.

Mckenzie says: “We want to help staff to become familiar with these areas. The fact that we have a defined contribution pension scheme means that staff have to be more involved. Yes, they can go for the default option, but they have to be more involved in thinking about what they do with their money when they get to retirement.”

B&Q auto-enrolled staff in 2013 and has an opt-out rate of about 6%.

The title of the group’s campaign is purposely focused on workplace savings rather than being pensions-specific to enable the employer to incorporate its share schemes, which include the Kingfisher three- and five-year annual sharesave schemes and the Kingfisher share incentive plan.

Mckenzie hopes her work so far will help to raise awareness about B&Q’s generous benefits package, particularly its enhanced maternity and paternity pay and additional leave for employees undergoing fertility treatment or who have carer responsibilities. In the process, she hopes to attract and retain key talent.

One thing is for sure: B&Q is well positioned in the war for talent in the ruthlessly competitive retail sector.

B&Q at a glance

B&Q is the UK’s largest home improvement and garden centre retailer, with more than 30,000 staff across 350 stores in the UK and eight stores in Ireland.

The workforce is broadly 50:50 male and female and ages range from 16 to 89, with employees’ average length of service currently seven years, with the longest-serving employee clocking up 41 years.

The organisation, which reported pre-tax profit of £364 million in the 26 weeks to 2 August 2014, is part of the Kingfisher group, which is Europe’s largest home improvement and retail group and the third largest in the world.

Career history

Janet Mckenzie joined B&Q as reward manager in June 2013 and has spent the past year overhauling its reward package.

She joined B&Q from The Body Shop, where she spent a year as international reward, policy and mobility manager.

Mckenzie previously worked as an interim reward manager for National Air Traffic Services and as interim head of HR at Welsh construction organisation MIB Group after four years as head of reward and benefits at infrastructure and media services organisation Arquiva and four years as reward and benefits manager at technology organisation Lockheed Martin UK.

Business objectives impacting benefits

• To make access to benefits easier for staff across the organisation, which will involve the launch of self-service access to benefits through store-based handheld devices in 2015.
• To build more flexibility into B&Q’s benefits provision.

The benefits

Pension

Money-purchase pension scheme (contributory) available to all staff

Employer contributions range from 2% to 14% and employee contributions range from 1% to over 8%.

Health and wellbeing

Group life cover worth four-times salary for pension scheme members and one-time salary for non-scheme members.

Ill-health early retirement cover option offered as part of the pension scheme.

Health cash plan available to all staff.

Private medical insurance for store support office grades.

Holiday

6 weeks and 6 days holiday including bank holidays, with an extra week’s holiday awarded for long service.

Workplace savings

Kingfisher annual sharesave three- and five-year schemes in which staff can save between £5 and £500 per month.

Kingfisher share incentive plan in which staff can save between £10 and £125 per month.

Voluntary benefits

In-store employee discounts.

Employer-negotiated discounts with other retailers.

Other benefits

Childcare vouchers.

Payroll giving.

Monthly bonuses for store-based staff of up to 10% of salary.

Annual bonus for management and store support office grades.