Internet property search firm Rightmove has realised that if staff are not aware of the benefits on offer, the value of investing in those benefits is diminished
Employee benefits account for over 50% of Rightmove’s cost base. The FTSE 250-listed internet property search company’s full year accounts for the 12 months to 31 December 2007 reveal underlying operating costs of £26m, up 61% from £16.1m in 2006. Of the £26m, 55% (£14.3m) was spent on salaries, bonuses, commissions, benefits and National Insurance.
Nevertheless, Rightmove, which provides a platform on which estate agents can market properties to the general public, has spent the last year enhancing its benefits package. In addition to salaries and bonuses, the company offers its 330 staff private medical insurance, life assurance, eyecare and childcare vouchers, a bike-to-work scheme, a sharesave scheme, a stakeholder pension and, since last July, enhanced maternity and paternity leave, annual health checks and season ticket loans.
The company now pays the first 12 weeks of an employee’s maternity leave at full pay followed by statutory pay, with staff on paternity leave entitled to one week on full pay in addition to their statutory entitlement. Rightmove also introduced a ‘double match’ pension scheme in January this year.
Staff must contribute at least 3% of their salary into the pension scheme, which Rightmove will double match with 6%, meaning that 9% goes into the employee’s stakeholder pension. The company will contribute a maximum of 6% but employees are free to contribute as much as they want. Simon Hickie, director of human resources for the company, says: “We made a decision that we wanted to start making a company contribution. What we didn’t set out to do was to provide a complete solution to employees’ retirement needs with one scheme; we simply wanted to get people on the right track and to raise their awareness of what is available.”
He adds: “We wanted it to be sufficiently attractive to get a high take up rate. It is the same rate for all employees. We take a very egalitarian view of benefits; everyone, regardless of level, is entitled to the same benefits from day one.”
The flotation of Rightmove on the London Stock Exchange in March 2006 prompted the company’s management board to formalise its employee benefit structure.
Hickie’s appointment one year later marked the company’s first real commitment to employee benefits. Prior to his arrival, there was no in-house function; finance director Scott Marshall assumed responsibility for certain elements of it and the rest was outsourced.
Hickie says: “There had never been a full strategic review of the benefits, so we wanted to make sure the benefits were fit for purpose. We looked at the benefits and we looked at the market, at what others were doing.”
Marshall, who qualified as a chartered accountant with Big Four accountancy firm Ernst & Young in his country of birth, Australia, joined Rightmove in 2001, a year after its launch.
He says: “When I joined the firm I looked after facilities, finance, HR and I was company secretary; I did a bit of everything.
“But there were 17 staff and we had zero turnover then. We’ve subsequently grown to 330 people over the last seven years, which doesn’t sound like a lot of people, but to go through that growth phase in such a quick period of time means that you don’t think about structure and functions so much; you’re just trying to grow the business.”
Marshall says that the company had been mulling its HR options for some time before Hickie’s appointment. But until then, it was a case of the company implementing benefits in response to employee proposals.
“The float obviously meant there was a lot more external visibility - if something goes wrong with a plc, you’re probably going to get more bad PR than a private company would and that was one of the contributing factors for tackling HR.
“But attending to the growth of the business was also a factor. While I could do all of the other functions - I’m a relatively practical person - we had got to a point where each area needed its own team, and we realised that it was time to grow up a little bit and get serious about the whole HR side of things which is why we introduced the HR function.”
Marshall’s finance team now comprises 19 staff, with the majority based in the company’s Milton Keynes office. The team manages invoicing, credit control, purchase ledger, payroll, tax and management and financial accounting. Investment in the function itself has included a new finance and billing system.
Marshall says he approaches employee benefits costs in terms of what is required to drive the growth of the business.
“Throughout the history of the company we have always approached cost in terms of what we need to do to drive the growth that we want, rather than say, ‘here’s a budget, let’s manage within that’. Almost every year we’ve been under the cost budget in the first half six months and over in the second half; it’s been quite fluid. We have increased the resources to cope with the growth.”
Hickie and Marshall say they work closely together on a daily basis to manage employee benefits. Hickie says: “Reward is closely linked with finance, so we have to look at things from both sides; the cost implications of the benefit enhancements that we want to implement, for example, versus the benefit accruing to employees and to morale and retention. It’s always a balancing act.”
The company has also worked hard to ensure that em-ployees understand and appreciate the value of their benefits through surveys.
Hickie says: “When I came in we realised that a lot of employee queries we get were based on a lack of awareness about what was on offer so we spent a lot of time communicating our benefits package to all of our employees. We put a new page on our intranet detailing all the benefits, introduced question-and-answer sessions and initiated HR surgeries where they can ask about their benefits.
“You just have to find as many different ways as you can to make sure employees are aware about what’s on offer.”
Scott Marshall financial director, Right Move
• Scott Marshall joined Ernst &Young in Australia in 1994 and qualified as a chartered accountant with the firm in 1999.
• After travelling overseas, he joined e-commerce firm Boxman.com as group financial controller.
• He joined Rightmove in 2001 as finance director and company secretary, though he also had responsibility for facilities and human resources.
• Marshall’s accountancy experience spans industry and public practice, with focus on corporate recovery and insolvency as well as international tax consulting.
RIGHT MOVE CORE BENEFITS
• Salary
• Bonus
• Private medical insurance, including annual health checks
• Life assurance
• Eyecare vouchers
• Childcare vouchers
• Bike-to-work scheme
• Sharesave scheme
• Stakeholder pension
• Maternity and paternity leave
• Season ticket loans
Company Overview
Rightmove.co.uk is a property search website on which estate agents can market their stock.
• The FTSE 250-listed company claims to have more than 90% of UK agents as members.
• Rightmove was launched in 2000 with 17 staff.
• With offices in London and Milton Keynes, it now has 330 staff and the UK’s largest property search website.
• Rightmove floated on the London Stock Exchange in March 2006.
• Its full year accounts for the 12 months to 31 December 2007 reveal that its advertisers increased 18% to 19,287 while pre-tax profit increased 77% to £31.4m.
• In August its market capitalisation was £360m and its share price £3.06, down from its £6.30 high last year.
Back to Employee Benefits Report for Financial Directors – September 2008
