Employer profile: Whitbread

Whitbread Costa

Leisure firm Whitbread is currently reviewing benefits as part of its aim to harmonise company culture across brands, says David Woods

The name Whitbread has for many years been synonymous with the brewing industry. Its founder Samuel Whitbread set up the first mass production brewery in Britain more than 250 years ago. However, following years of diversification that included ventures into wine, spirits and night clubs, the company sold off its breweries and pubs and bars business at the turn of this century to concentrate on the growth areas of hotels and restaurants.

The reinvention of Whitbread has continued over the last couple of years, with the disposal of familiar names such as Pizza Hut, David Lloyd Leisure and Café Rouge to leave brands such as cafe chain Costa Coffee, hotel network Premier Inn and Beefeater and Brewers Fayre, which both sit within the restaurant division. In addition, Whitbread operates Touchbase which provides conference facilities at some of its major hotel sites.

This watershed period in the company’s history may have refocused the business on hospitality and growth markets, but it leaves the task of instilling a strong company culture across all of the existing brands which previously operated independently of one another. Jo Rackham, group reward manager, says: “We aspire to be market leaders in all of the fields that we are in and that was part of our rationale for disposing of our other brands.”

This challenge has been made easier by the decision to bring each of the remaining businesses together to operate out of one head office so that they can benefit from a pool of central expertise, from staff communication to benefits provision.

As part of this process of harmonising the company’s culture across the brand portfolio, Rackham and her team have been tasked with standardising benefits for Whitbread’s 35,000 employees. Every benefit is currently under review to ascertain if it is still relevant to staff and, where perks are considered to be above the industry norm, whether they deliver a return on investment. “We are in the midst of agreeing a suitable implementation plan, but we have been reviewing company sick pay, pensions, healthcare schemes and a huge array of other working policies,” explains Rackham.

The review is expected to be completed by October 2008. “By and large, we are one company and why should the benefits offering for a team member in one outlet be different from a team member in another outlet?” she says.

Company culture
This process, however, has not been an easy one. “The difficulty is that our strategic business units have immediate needs, and when they come to a central team that is managing lots of different queries, we often won’t be able to respond as quickly as they would like. But we can balance that when they do get our resource [as] they have the benefit of our experience,” explains Rackham.

Whitbread employs a wide range of staff ranging from transient employees looking for a stop gap for a few months, to long-serving management team members. Nonetheless, all staff are valued equally and are given access to perks from day one of their employment. “We have good retention rates because our people join our business and recognise our culture. If we look after our people we believe they will look after guests. We always put our people at the heart of everything we do,” says Rackham.

This ethos of offering as many staff as possible access to the same benefits has, in some cases, come at a price. It has decided not to introduce childcare vouchers for any of its employees as large numbers of staff would be unable to take advantage of salary sacrifice benefits, as doing so would take their net pay below the national minimum wage.

“We have just taken the radical stance not to implement childcare vouchers because we disagree with the government’s legislation around minimum wage. The people who need childcare vouchers the most can’t have them. We don’t want to implement benefits that are only relational to some of our workforce. That doesn’t feel responsible or caring,” explains Rackham.

It is consulting with the Low Pay Commission in a bid to change the government’s rules on how minimum wage and childcare vouchers work. Meanwhile, the firm is working on offering alternative forms of childcare support. It is in the process of negotiating discounts for staff with local nurseries nationwide and has recently introduced flexible working initiatives.

In a bid to remain competitive in what is a tough sector, Whitbread is also in the process of revamping its pay structure. Previously, pay rises were awarded at a managers’ discretion, however, pay levels are now being graded according to employees’ job roles. These bands vary between brands to reflect the different nature of roles.

Pay bands
The company is keen to ensure that these new pay bands are transparent. Managers at site level are being given pay rates for their teams and are encouraged to show these to staff. This means new employees will have an idea of how much they can expect to be paid as their career progresses.

Last year also saw changes to the company’s long service awards scheme so that awadrs are made more frequently. The loyalty recognition scheme now rewards employees after ten years’ service and then after every subsequent period of five years. Previously, long service awards were only presented after 20 and 30 years’ service.

All of Whitbread’s benefits schemes are managed internally, however, providers are used for specialist perks such as its fleet and pension schemes. “I think it’s worth managing our benefits in-house. It means that our small team has a lot to do but it also means that we know exactly what is happening with our people and what would make a difference to them,” says Rackham.

Once the harmonisation project is completed, Rackham and her team have further challenges ahead, including the development of an effective method to communicate benefits to all staff. “Communication is difficult in a organisation such as ours, where most of the workforce don’t have access to a computer,” explains Rackham.

Whitbread currently uses its intranet system and unit managers to communicate perks to staff. However, these methods have proved to be tedious and are not thought to work well. It has has also tried using paper total reward statements, but found these to be costly and unable to provide an adequate return on investment. As a result, it will be investigating alternatives in the coming year.

Looking further afield, as Whitbread brands are launched overseas, the challenge of developing benefits provision internationally is on the horizon. “It is a little early to say [if we will manage our international benefits from head office]. Tentatively I would say yes, but we will have to wait and see. At the moment, that’s how we are doing it, but we are very aware of the different cultural needs of each country,” says Rackham.

Philip Hutchinson, principal at Mercer, believes that large organisations should take a long-term view of what challenges lie ahead and plan for them. “A firm needs to think about where [it] will be in four or five years’ time. [It doesn’t] want to do something today that will work against future aims.”

This is an approach that Rackham is taking in relation to benefits harmonisation. “A lot of organisations focus on what will give the biggest return on investment from benefits, without necessarily relating it back to their people, their sector, their industry, their competitors and their long-term goals. Everything we set up in Whitbread, we set up for the long term. We don’t do any flash-in-the-pan stuff. If we implement a benefit, it has got to work,” she says.

Whitbread at a glance

Whitbread’s founder, Samuel Whitbread built the firm’s first brewery back in 1742. Over the years the company diversified entering a number of new markets.

However, over the past ten years, the focus of the business has changed and Whitbread has sold a number of its businesses, including its pubs and bars, Caf» Rouge, David Lloyd Leisure, Bella Pasta and its joint venture in Pizza Hut with Pepsico. The business is now concentrating on interests in the hotel and restaurant sector. Its main brands comprise Costa Coffee, Brewers Fayre, Beefeater, Touchbase and the recently renamed Premier Inn, which was formerly known as Premier Travel Inn.

This strategy has so far paid dividends for the firm as the restaurant division is the UK’s biggest branded restaurant operator, Premier Travel Inn is the country’s largest hotel chain, while Costa Coffee is the largest British-founded coffee shop, all in terms of the number of sites each operates.

In the six months from 2 March to 30 August 2007, the company reported a 13.3% rise in pre-tax profits, up to £99.4million, and 10.8% rise in revenue to £590.2million. According to its latest trading statement, its sales were up 11% and like-for-like sales increased 5.8% for the 39 weeks to 29 November, 2007.

The company employs around 35,000 staff nationwide, mainly in its restaurant division. Around 70% of its employees are aged under 30 years, while the average age of service is approximately 2.5 years.

Career profile

Jo Rackham group reward manager at Whitbread, took on the role two years ago. She has always aspired to work in HR, but has a particular interest in reward. “It just seems to be in my blood.”

Rackham’s career began in the leisure and tourism industry where she worked in a generalist HR capacity at London Luton Airport. Here, she focused primarily on resourcing and payroll, so her move to Whitbread’s HR department ten years ago was a natural progression.

Following the move, Rackham initially worked for Beefeater in management resourcing and progressed to divisional resourcing when the Whitbread restaurants division was created in 2000.

Rackham then took on a newly-created HR role in the restaurants division, which was focused on developing the firm’s reporting and measurement platforms.

In 2002, Rackham moved into reward, heading up the combined reward and HR administration and processing team for the restaurants division, before moving into her current role of managing reward for the entire company.

What are the benefits?

Non-contributory stakeholder pension scheme available for all employees.

There is a separate defined contribution (DC) scheme for all management positions and head office staff. Employees contribute 3%, while the company’s contributions range from 4.5% up to 10% for senior management.

Employer-funded Bupa private medical insurance for all management grades and all 1,000 head office staff.

Family cover is provided for middle management grades and above.

Company-funded employee assistance programme (EAP) for all employees and their families.

Company cars
Company car scheme for all management from junior level if they require it for work. Employee car ownership plan (Ecop) offered to all workers.

Voluntary benefits
A privilege card provides staff with a 25% discount at all Whitbread brands.

Corporate discounts on products including RAC, HSA healthcare cash plan, Denplan, Vodafone, Alton Towers, Haven, AA Driving School, Thomas Cook and Linguaphone.

Share schemes
Sharesave plan offered to all employees.

Charity giving
Payroll giving scheme for all employees.

Annual bonus for salaried employees based on profit targets, team turnover, health and safety targets and guest feedback.

Loyalty recognition scheme
Employees are recognised after 10 years’ service and then after every five subsequent years.

Social clubs and catering perks
Staff receive a 50% discount on all food in the workplace while they are on duty.

There is also a sports and social club at head office which organises staff events.

Case study: ‘Bean’ well treated
Yvette Masters works in operational retail support for Costa Coffee at Whitbread’s head office near Luton. Along with a team of 24 employees, she is responsible for ordering equipment for 630 Costa Coffee outlets nationwide.

Masters has been in her current role of support administrator for three months. However, she previously worked at Whitbread head office four years ago before going to the US to study. On her return, she was happy to work for the company again.“Whitbread [is] one of the best employers to work for in Luton,” she says.

Masters makes regular use of her 25% employee discount at any Whitbread restaurant, Costa Coffee and Premier Inn. “When I am out shopping, I find myself looking for a Costa so I can use my discount and I am always made really welcome there. This is something that I would miss if I didn’t have it,” she explains.

Masters also appreciates the bonus scheme that is available for Whitbread staff and makes use of the private medical insurance, provided by Bupa, that is available for head office staff.