A philosophy of ‘boring is good’ has served Yorkshire and Clydesdale Banks well during the recession, but that description does not apply to its staff perks, says Tom Washington
Yorkshire Bank celebrates its 150th anniversary this year, and has seen off one or two recessions in its time. But given the current financial crisis, the party poppers may be kept under wraps for a while yet.
However, Clydesdale Bank, of which Yorkshire Bank is now a division, is proving its resilience in the downturn. Its 2008 full-year results showed an 8.9% increase in pre-tax cash earnings compared with the previous year, and its underlying profit was up 11.9% to £518 million.
Clydesdale and Yorkshire Banks were bought by National Australia Bank Group (NAB) in 1987 and 1990, respectively, and have operated under a single banking licence in the UK since 2005. At that point Yorkshire became a division of Clydesdale but retained its own name for trading purposes.
The banks operate under separate brand identities in the marketplace. Yorkshire has 190 branches, mainly in the north of England, while Clydesdale, with 150 branches, primarily in Scotland, is the brand that has been used for recent expansion into the south of England with a series of Financial Solutions Centres, offering business and private banking services.
The two banks’ average retail deposit volumes grew by 16.7%, or £2.6 billion, last year, and Nigel Grimshaw, HR business partner at Yorkshire Bank, believes the external perception of Clydesdale and Yorkshire remains one of safe, prudent banking.
“We have been around a long time and are probably seen as a no-nonsense bank with traditional values,” he says. “We have not been involved in all the exotic derivatives that have wreaked havoc with the market and have talked about ourselves in recent times as ‘boring is good’.”
The banks have taken steps to ensure their internal reward policies are just as sustainable. Last November, they introduced salary sacrifice arrangements for their defined contribution (DC) pension scheme, with the resultant tax and national insurance savings being used to help fund employer pension contributions. Since April 2006, new staff have been automatically enrolled into the DC scheme, with the banks contributing 5% of employees’ salaries regardless of what staff put in themselves.
In the same year, the banks switched their defined benefit (DB) scheme to a career average pension plan, which Grimshaw says was a challenging exercise. “It was tough getting people onside and explaining to them why we made the changes, which was to support the business and to manage the funding deficit we were facing at the time,” he adds.
“The fact is, the reward strategy is there to attract and retain talent. But we have to be mindful to do it in a cost-effective manner and consider what the benefits are of putting a particular reward strategy or benefit in place against what the cost might be. We are always mindful of financial impact.”
Grimshaw says the emphasis is very much on total reward at Clydesdale and Yorkshire banks. “People come to work for lots of reasons and money is just one of them,” he says. “We like to consider the broader definition of reward. It is not just about the pay and bonuses or the add-ons, such as discounts, but the more rewarding experience. We try to create an environment where our employees feel valued.”
Lifestyle benefits
In 2007, the banks reviewed their benefits package and improved their family-friendly policies and lifestyle benefits. One initiative was to get more line managers to encourage staff to work flexibly. “We are really keen to create a diverse workforce,” says Grimshaw. “Not just in terms of gender and religion, but diversity of lifestyle as well. To do that, you have to look at what your benefits package looks like. Not everyone wants to work from nine to five, so we were keen for people to work what hours suit them in terms of flexible working arrangements.”
Lifestyle perks that were introduced include life event leave, whereby staff can request up to five days’ leave to cover both planned events, such as a wedding or moving house, and unplanned events, such as domestic and caring issues. After 13 weeks’ service, employees are entitled to maternity leave of 12 weeks at full pay and six weeks at 50% pay, and up to two days’ paid leave for partners to attend scan appointments.
If employees have at least one year of continuous service, they are now entitled to take up to 13 weeks’ unpaid parental leave for each child, or up to 18 weeks off to care for a child with disabilities. Adoption benefits offer the same time off as maternity leave, and three days’ paid leave is allowed for adoption hearings. Staff are also entitled to request a career break after two years’ service.
At the time of the benefits review, the banks also overhauled their reward classification model. They replaced a simplistic, hierarchical one-to-nine grading structure with a framework based on four groups of skill and competency. Under this model, remuneration is based on a combination of what the role is worth in the market and individual performance. All roles have a market reference remuneration level, and salaries are set at a minimum of 80% and a maximum of 120% of the relevant figure.
The restructure was also intended to change the career progression culture from one where staff simply looked to move upward in their own department to one that encourages far more internal movement across the banks’ different business units. Grimshaw concedes this is work in progress, but points out: “We are working on a career development model to provide a means by which people can look at the roles that are available across the business and see what skills are needed. Through discussions with their line manager, staff can see how they can develop the skills needed to move into that role.”
Clydesdale and Yorkshire Banks have long been involved in corporate social responsibility (CSR) and have recently committed to spend 1% of their pre-tax profit on community investment projects.
Employee volunteering
One of the CSR initiatives is employee volunteering. All staff are offered a minimum of two days a year to volunteer for one of the many initiatives the banks operate as a partnership. These include visiting a school to help children with reading, mentoring community leaders, and helping with building work at a local farm.
Last year, 2,000 days of volunteering were performed, but community affairs manager Jacqui Atkinson believes more can be done. “We are looking to increase that figure to 3,000 days this year, as well as increase the menu of opportunities available,” she says. “We recently found out that a lot of our people are school governors, so we have incorporated that.”
The Yorkshire and Clydesdale Bank Foundation was set up last year to recognise staff who perform charitable work in their own time. These employees can apply for a grant of up to £500 for their chosen cause, and about 60 such payments are made each quarter, equating to £120,000 a year. “We want to recognise active citizenship,” says Atkinson.
Clydesdale and Yorkshire Banks also work alongside Workplace Giving UK to facilitate staff donations to their chosen charity through payroll in a tax-efficient way, with the employer matching donations pound for pound. Under the give-as-you-earn scheme, £15,500 a month is donated to charities, excluding the matching company contributions, and 17% of the banks’ workforce is involved. “We would like to get to 20%, but for a large company with various sites, that is quite difficult,” says Atkinson.
Although staff can donate to any charity they choose, the banks’ charity partner is Help the Hospices, for which they have raised more than £450,000 in the past year.
“We are very proud of our people,” says Atkinson. “The business case for CSR is to do with staff retention and motivation. The feedback we get from our volunteers is that they often come back to work with a completely different perspective. When staff get out of the office and do positive work, they come back more motivated.”
Clydesdale and Yorkshire Banks at a glance:
Clydesdale and Yorkshire Banks which have 9,000 employees, are commercial banks that have shared the same parent company, National Australia Bank, since 1990. They were founded in 1838 and 1839, respectively.
The banks boast 2.6 million customers in the UK and have operated under a single banking licence since 2005, when the Yorkshire Bank became a division of the Clydesdale but retained its own name for trading purposes.
The banks offer their personal customers products such as savings, loans, mortgage, insurance, and financial advisory services.
While businesses are offered treasury solutions, corporate finance, protection, and wealth management services through Financial Solutions Centres.
In their 2008 full-year results, the banks reported an 8.9% increase in pre-tax cash earnings compared with the previous year. Average retail deposit volumes grew by 16.7%.
Employee satisfaction stands at 86.7%, based on a survey conducted in May last year.
A fifth (20%) of employees donate to charities through a give-as-you-earn scheme.
Career profiles:
HR business partner Nigel Grimshaw joined Yorkshire Bank in 1984 as a management development trainee in retail banking. Several years later, he moved into HR as an analyst and then manager for the Midlands district and Leeds. In 1999, he became reward manager at the bank’s head office.
During his four years in that role, Grimshaw rates his biggest achievement as being involved in parent company National Australia Bank’s sale of National Irish Bank and Northern Bank to Danske Bank. “We conducted due diligence of our benefits so when we came to talk to Danske, we could tell it how the share scheme worked, what we offered in terms of benefits, what it was getting into in terms of pension deficits, and so on.” Community affairs manager Jacqui Atkinson joined Yorkshire Bank 30 years ago as a branch junior and has performed a wide range of roles for the firm, including a stint as a staff trainer. She has been in her current post since 2004, and now manages the community investment programme - a role created to strengthen the banks’ CSR work in local areas.
Case Study: Lifestyle perks are impressive
Alan Wailes, analyst, products and marketing, has worked at Yorkshire Bank for five and a half years. He began as a banking adviser in various branches of the bank in Leeds before moving to the head office and his current role 18 months ago.
His day-to-day duties involve promoting the bank’s CSR volunteering scheme to staff internally to try to increase take-up, while exploring new charitable partnership opportunities in the local area. He recently helped to implement a programme to allow staff paid time off to be school governors.
Wailes says it is the banks’ lifestyle perks that impress him most. He regularly uses the on-site gym and, since the birth of his daughter nine months ago, has benefited from the bank’s understanding that each employee has different lifestyle needs. “Flexible working has become more apparent,” he says. “I can now get time off to go to childcare appointments.”
The benefits:
Pension
- Defined benefit (DB) pension scheme, which has been closed to new members since 2004.
- Defined contribution (DC) scheme where the company pays 5% of pensionable salary into the member’s pension regardless of whether the member contributes. The company matches employee contributions up to 5%.
Voluntary benefits
The banks’ Affinity Rewards scheme, provided by P&MM, offers discounts and savings on cinema tickets, high-street retailers, and health and leisure activities.
Shares and bonuses
Share incentive plan (Sip) available for employees who have at least six months’ continuous service. The plan offers employees the opportunity to contribute between £10 and £125 from their pre-tax salary every month to buy National Australia Bank shares.
Banking Benefits
Discounted loans and mortgages.
Holiday
25 to 30 days.
Family friendly benefits
- Flexible working arrangements
- Company-paid maternity and adoption pay - 12 weeks at 100% of salary, six weeks at 50%
- Parental leave: up to 13 weeks of unpaid parental leave for each child, or up to 18 weeks off to care for a child with disabilities
- Life event leave
- Career break after two years’ service
