Employer profile: Scottish Power

Scottish%20PowerScottish Power prioritises healthcare and wellness perks, making doctors and nurses available on a number of its sites, says Nick Golding

Scottish Power is no stranger to acquisitions. Since it was formed in 1990, it has bought UK companies Southern Water and Manweb, and American firm Pacificorp.

But now the boot is on the other foot. One of the biggest challenges that the energy firm currently faces is ensuring that its own takeover, by Spanish energy company Iberdrola, is a smooth one. This was agreed by the Scottish Power board in November 2006, at a cost of £11.6bn to the Spanish firm.

But this doesn’t mean that Scottish Power is being forced to adapt to the ways of its new owners, at least where benefits are concerned. Although perks are often consolidated following a takeover, several areas at Scottish Power are to remain untouched for the immediate future.

One such area is healthcare. Scottish Power certainly takes the wellbeing of its 9,000 employees seriously, and has made a huge effort to ensure it offers all its workforce a similar level of health-related perks, despite the fact that staff are split between office and power station sites spread across Scotland, the north of England and Wales.

By providing private medical insurance (PMI), fitness centres and on-site visits from doctors and nurses, Scottish Power believes it has the health-related benefits box ticked.

All of its health and wellbeing schemes are co-ordinated through the organisation’s occupational health department, headed up by Dr Steve Deacon, group medical, health and safety director.

He believes demonstrating that the company has an interest in, and is willing to invest in, employee wellbeing creates a positive working environment. “We are trying to create a working environment that recruits, retains, motivates and stimulates employees,” Deacon explains.

All employees undergo a medical check when they join the organisation, the results of which are analysed by the occupational health department. These are then tallied against the profile of all employees’ roles. “All of the jobs at Scottish Power have been profiled so that we understand all the health risks involved, and we are immediately aware of an employee’s health requirements in any role,” explains Deacon.

Occupational health
The company also supplies three doctors and 15 nurses who split their time across its sites, making it easy for staff to access healthcare. Currently, 12 of Scottish Power’s larger UK sites have occupational health departments, which consist of waiting rooms, fitness centres, and offices for its doctors and nurses to use for consultations.

While the nurses are available to carry out various health checks and deal with minor complaints, the doctors can deal with more serious long-term issues.

The limited number of on-site healthcare professionals means they are not available at every location all of the time. Instead, employees are advised when the doctors and nurses will be visiting their site and available for them to book an appointment.

“All the sites may not be manned [from] nine-to-five everyday but the doctors and nurses move around. If the nurse visits a site on a Monday afternoon, all the staff will be aware of this,” says Deacon.

But Scottish Power does not only offer benefits designed to assist employees once they have developed a health problem, as it also has a number of preventative programmes in place to encourage improved wellbeing.

At its larger sites, for example, it provides on-site gyms with modern equipment and fitness instructors that employees can use at a heavily-subsidised rate of £15 per month.

The gymnasiums are also open on Saturdays so that employees working on smaller sites that do not have gym facilities can also use the benefit.

Each month, Deacon’s team highlights a specific health issue, such as healthy eating or stress, and offers staff the opportunity to learn more about preventing common workplace illnesses.

With such an emphasis on health issues it would be easy to assume that sickness absence is a problem at Scottish Power, and that the benefits it offers have been designed to reduce this. With a current absence rate of 11.5 days per employee per year, some might say that this would be an easy assumption to make, but Deacon claims the firm’s absence level is in line with its UK competitors such as Powergen and Npower.

Absence software
However, Deacon adds that he would like to use its health-related benefits more strategically to combat long-term absence. “Short-term absence is usually a motivational issue best managed by line managers, [while] longer term absence has a more serious medical content and needs occupational health intervention and support to resolve,” says Deacon.

To help tackle the problem of long-term absence, the organisation has introduced an absence management software that collates information on the number of days employees have taken off sick. Installed in January, the Opas system documents absence taken over a particular period of time, allowing the occupational health department to quickly identify where problems around absence exist. By making the reporting system more efficient it is hoped that the absence rate at Scottish Power will fall.

Pensions are a further benefit that will remain untouched despite the takeover. Scottish Power has entered into an agreement with new parent company Iberdrola, and has committed to making no changes to its pension scheme for at least the next two years.

The organisation currently offers a stakeholder pension scheme with competitive contribution rates and an open final salary plan, which employees can transfer into after 10 years in the defined contribution pension. This arrangement was set up in April last year, when a set of eligibility criteria for the final salary plan was introduced and a stakeholder pension scheme was launched.

Employees can sign up to and start making contributions to the pension scheme immediately when they join the organisation, however, Scottish Power does not begin contributing until staff have completed six months’ service.

Employees must contribute a minimum of 5% of salary in order to qualify for employer contributions, which begin at 6% and gradually rise up to 14% after staff have completed 25 years’ service.

Although Scottish Power still has an open DB scheme, some believe that the perk is somewhat diluted by the fact that staff must spend 10 years in a DC plan before they are eligible to join. John Deacon, director at Truestone Employee Benefits, says: “Putting aside the fact there is a ten-year eligibility on the scheme, the fact that the final salary scheme is still open is definitely a plus.”

But he adds that Scottish Power should be sure to communicate the value of its DC arrangement effectively to staff who may feel that they deserve to be part of the final salary pension plan before reaching 10 years’ service. “It is not actually a great incentive for staying, because the company is saying ‘ok if [you give] ten years’ service [you] get looked after, otherwise [you’re] a second-class citizen’.”

One immediate casualty of the Iberdrola takeover, however, is Scottish Power’s sharesave scheme, which has been running since 1991 and allows staff to save a fixed contribution from their net salary of up to £250 a month. After three or five years employees then had the option to buy Scottish Power shares at the price set when they began saving, with a 20% discount. Instead of buying the shares at this point, employees could choose to take their money back along with tax-free bonus, which was determined by the length of time they had been saving.

However, following the takeover, members of the sharesave scheme have been forced to suspend making savings and to take their options early. Iberdrola is currently considering running an equivalent scheme for both Iberdrola and Scottish Power employees, although a final decision is yet to be made.

On a more positive note, the company offers a variety of flexible working arrangements for staff, especially around holiday. All employees, regardless of seniority or length of service, are eligible for 25 days annual leave per year. Staff are also awarded a degree of flexibility around bank holidays, which they can take when they wish throughout the year, provided that they work on the actual bank holiday.

Going forward, it will be interesting to see whether the takeover affects this arrangement and other benefits at Scottish Power.

Scottish Power at a glance

Scottish Power was formed in 1990 following the privatisation of the Scottish electricity industry, and covers three areas: energy wholesale, energy retail and energy networks. Energy retail handles customer accounts, while energy wholesale is responsible for power generation, and energy networks deals with the distribution and transmission network within the UK.

The firm supplies energy to the UK, with its head office in Glasgow, and sites across the North West of England and North Wales.

In 1995, Scottish Power bought Manweb, the supplier of electricity to Merseyside and North Wales, before purchasing Southern Water a year later in order to move into the water supply business. It then sold the water company in 2002.

In 2000, Scottish Power bought American electricity supplier Pacificorp, which it subsequently sold in 2005.

The roles were reversed in November 2006 when Scottish Power’s board agreed to a £11.6bn takeover by Spanish energy company Iberdrola, of which it is now a subsidiary.

It employs almost 9,000 staff in the UK, of which more than 6,000 are male and around 3,000 female.

Career profile: Dr Steve Deacon

Dr Steve Deacon began his career as a general practitioner before taking up occupational health roles at organisations such as Kellogg’s and Mars.

Before he joined Scottish Power in November 2006, Deacon completed a two-year stint as head of health services at Royal Mail. Here, he was part of the team that transformed the way in which absence was reported and dealt with at the postal firm. Deacon cites this as one of his main achievements.

During his time at Royal Mail, there was a reduction in the period between an employee going off work sick and their manager receiving a report from the doctor from 24 to 12 days.

At Scottish Power, Deacon plans to alter the way that staff use occupational health services, and to improve the efficiency of the benefits on offer.

“We have tried to improve the quality of relationships between line managers and human resources, because occupational health has perhaps been a little remote in the past,” he explains.

What are the benefits?

25 days as standard.
Staff can choose to work any of the national bank holidays and then take the day off another time.†

Private medical insurance (PMI) for all employees.This is company-paid for senior management, while a corporate discount is negotiated for all other staff. On-site doctors and nurses who move between sites. Subsidised gyms at some locations which can be used by staff based at other sites.†

Defined benefit (DB) pension scheme open to all employees who have completed ten years of membership in the company stakeholder scheme. Stakeholder plan available for all employees, with employer contributions after six months’ service, providing staff contribute a minimum of 5%. Employer contributions start at 6%, and gradually rise up to 14% after staff have completed 25 years’ service.

Perk drivers are offered the choice of an employee car ownership plan or a cash alternative.

Case study: Scottish Power

Wired into the company’s DB planBarbara Teape is an executive support assistant at Scottish Power, where she has worked for 29 years.

Teape is a member of the company’s defined benefit (DB) scheme, having joined before the stakeholder scheme and eligibility criteria requirements for the final salary plan were introduced. “I joined the scheme when I was 20 years old, and I receive regular updates and statements letting me know how much I have. Scottish Power certainly keep me well informed,” she says.

Teape also values the variety of health-related options that are available, especially the on-site gym that is available at the Glasgow head office. She particularly appreciates its convenience and low cost. “I probably use the gym three times a week, and if I wanted to, I could come in on a Saturday and use it, so it’s really useful,” she says.