A demerger is just the latest change at Cable and Wireless, where staff are kept on their toes, says Sarah Coles
Last month, Cable and Wireless went through a demerger, spinning off Cable and Wireless International, the telecoms part of the business, from Cable and Wireless Worldwide, the business services arm. Any demerger can be unsettling for employees, who have their accepted routines, comfortable habits and assumptions about the business changed.
But for Cable and Wireless Worldwide employees, the reality is very different.
Change is in the company’s corporate DNA. During its illustrious history, the business has been through its fair share of change, which has accelerated since 2003, from which date it has been turning its fortunes around. Paul Bissell, head of reward, people and brand at Cable and Wireless Worldwide, describes the process as a “refocusing”, but it has been more dramatic than that. Back in 2006, the business was losing about £1.6 million a day. Last year it reported pre-tax earnings of £326 million, making it the second best-performing telecoms company in the world. Bissell says: “The company has been through multiple changes and it continues to change almost on a weekly basis as we refine the business model.”
During that time, staff have been shed and some offices dramatically downsized. “It has required flexibility from the people, and agility from the company, and a lot of people are no longer with us,” adds Bissell.
The demerger has also involved a lot of work around the company’s benefits package. Cable and Wireless was an early adopter of flexible benefits and, after the demerger, its flex scheme Flex Annually remains in place. However, there are a number of enhancements in the pipeline.
Huge, complex workload
Keeping benefits roughly the same sounds simple, but the demerger has been complicated, throwing up myriad issues, including creating a share scheme from scratch and the complexities surrounding pensions. Bissell says: “You can talk about the changes in a couple of sentences, but behind that is a huge, complex workload.”
And there is still work to be done. Bissell says he would like to achieve better take-up of the company’s share scheme, a share incentive plan (Sip) that offers a matching share for every partnership share bought. This has been relaunched since the demerger, having previously operated in the combined company. “The current level may be because Cable and Wireless Worldwide is relatively new, or because through the recession, people have wanted to hang on to cash, but we will be promoting it, and we would like to see participation increase,” he says. “It is good for employees – if they had signed up at launch, by April 2009 they would have made 230% growth – but it is also good for the business. One of our aims is to have people with skin in the game to build engagement.”
There is also work to be done on an international level. The business has started to harmonise benefits that are suitable for globalisation. For example, it operates a phantom share plan for non-UK employees that mirrors the benefits of the Sip. “It varies around the world,” says Bissell. “Like pay, it is not designed to be equal everywhere, it is intended to be equitable everywhere.”
The phantom plan will pay out an equivalent of the £1,500 that would be the full award under the Sip. The phantom scheme has the same three-year vesting period as the Sip, and varies with share performance, before being paid out as cash. “We are going to spend more time on the globalisation of the package, while still reflecting local norms and local good practice,” says Bissell.
Developing benefits in an environment of constant change is exhausting, but rewarding. Bissell says he was first brought into the company as a consultant to work on a specific project and had not been seeking a full-time role. But when one came up, he says he was “seduced by the fact that it is a business that does things differently”.
That fact is apparent from a walk round the firm’s Bracknell office, where staff work in a colourful, larger-than-life atmosphere. A colleague competition selects photos taken by employees to be blown up and used to decorate the walls.
The concept of providing employees with flexibility and freedom is a key theme in the company’s benefits package. Louise Woodcock, reward and policy manager, says: “Giving people flexibility means trusting them to make the right choices.”
This trust is clearly justified, because most staff take the time to get involved in selecting benefits. Some 90% are enrolled into the company’s pension and 60% make the effort to go into the flexible benefits plan during its annual renewal period to select their perks.
The idea of giving staff the flexibility and freedom they need to get the job done is built into the company’s culture. When they start work at the organisation, new employees are not issued with a desk and a landline phone, but with a mobile and a laptop.
Apart from a handful of very senior staff, everyone works in open-plan offices, and can choose to work anywhere they like, from a stool by the on-site cafe to a different desk every day. And they do. Sarah Lardner, rewards consultant, explains: “We all know places which have a notional hot-desking policy, but here it really works.”
Change built into the routine
Change is therefore built into the daily routine. Bissell explains: “The chairman, John Pluthero, and chief executive Jim Marsh take an adult view of people. [Employees] are given the tools and the flexibility they need to do their job, and [they] trust them to get on with it. If they abuse it, we have the systems in place to find out, but we trust employees as adults to know where to draw the line.”
This approach works with the company’s mature, professional workforce, which has an average age of just over 40, earning an average salary of £40,000.
The company’s approach to change means the employees who remain have come through the demerger experience largely positively. “In those situations it is easy to lose the goodwill of staff, but we have not seen any of that,” says Bissell. “We have seen some battle weariness, but no loss of motivation.”
The statistics back this up. The average length of service remains at 8.2 years, and voluntary attrition is running at about 7%. Part of the reason for this is that the business has a sensitive approach to downsizing, and adopted an open approach to communicating the changes throughout the demerger process. The other part of the reason is the type of people who work at the company. Change is built into their DNA, too.
Cable and Wireless Worldwide may not be a comfortable place for staff who like routine, but it is exciting and rewarding for those who are ready to embrace change.
Cable and Wireless at a glance
Cable and Wireless started life more than 130 years ago. It was nationalised during the Second World War because it was considered of strategic importance. In 1981, it became the first privatisation of the Thatcher government, with 49% of the company sold. The remaining 51% was sold in two further tranches, in 1983 and 1985. In 1997 it merged with a number of cable providers, and struggled financially for more than five years.
The firm’s turnaround began in 2003. Actions included resolving a significant tax issue, the sale of its Japanese business and the exit from loss-making US operations. It also bought Energis. In 2006, it restructured as two standalone businesses: Cable and Wireless International (CWI), and Cable and Wireless Europe, Asia and US (EAUS). In 2008, EAUS completed the purchase of TelcoThus and in early 2009, the EAUS and international businesses were renamed Worldwide and CWI, respectively.
The turnaround was complete that year, with the business moving into profit. CWI manages regional telecoms businesses in small to medium-sized markets, while the Worldwide business specialises in services such as IP, data, voice and hosting to businesses. On 26 March the two businesses were split in a demerger, and CWI was renamed as Cable and Wireless Communications.
Worldwide is now a major telecoms business services arm with 35 bases in 16 countries, providing services such as the network supporting communications in Tesco, and servicing Airwaves, the company that supports all the UK’s emergency services.
Paul Bissell, head of reward, people and brand, has worked for Cable and Wireless since April 2009. He was first brought in as a consultant – he had been running his own independent reward consultancy since the end of 2008 – but decided to take up a permanent position when one arose.
Before that, Bissell worked for Nationwide Building Society for 11 years, latterly as head of reward. Of that time, he says: “We did some good work. We were named the Sunday Times’ best big company to work for, we did a massive amount of work on employee engagement and we proved the link between engagement, customer loyalty and corporate performance. We also did a lot of work on segmenting the employee population to improve the design and communication of the package, and built what, at the time, was a cutting-edge, holistic systems-based reward package.”
Bissell is a fellow of the Chartered Institute of Personnel and Development and former CIPD vice-president of reward.
Sarah Lardner, rewards consultant, is working with the people team on a fixed-term contract between November 2009 and May 2010. She is a reward consultant whose clients include EDF Energy and various local councils.
Before that, she was a consultant with Jardine Lloyd Thompson, and worked for Nationwide for a number of years.
Louise Woodcock, reward and policy manager, has been with the Cable and Wireless reward team for more than three years.
Before that, she worked for the Renault retail group for three years, and for Virgin management for two years.
Case study: Extra holiday is a bonus
Brian Chalk is a data analyst who has worked for Cable and Wireless for two years. He has just enrolled into the flexible benefits plan for the second year, and says the perks he most values are the healthcare scheme and the ability to buy extra holiday.
“I look for work-life balance because I like to take long holidays to work on conservation projects, so the ability to buy more holiday is very important,” he says. “This year I bought five days.”
He also values the bonus plan, which he used to pay for one of his holidays last year. He says: “The money is nice, and it makes you feel rewarded and respected.”
Chalk has not enrolled in the share scheme, however. “I seriously considered it, but I like to have the cash available, particularly at the moment with the economy the way it is,” he says. “I did not want to tie it up for three years because I need the money handy.”
However, he will consider joining the scheme at the next enrolment date.
What are the benefits at Cable and Wireless?
– Pension. Defined contribution scheme is available to all new employees, with some legacy defined benefit members. New members can contribute up to 5% of salary, with a 1.5 times match
– Life cover
– Private medical insurance for employees and their families
– Health screening
– Dental insurance
– Travel insurance
– Annual leave, allowing the sale of five days or the purchase of an additional 10
– Income protection for all employees, with no time limits
– Eyecare run through expenses
– Personal accident cover, run on a discretionary basis
– Employee assistance programme
– Interest-free loan for season ticket or to fund sabbatical
– Childcare vouchers and bikes-for-work available through salary sacrifice
– Range of discounts offered through the My CW Discounts site.
– Discounted gym membership
Each office has a nominated site head that arranges team-building events. Bracknell offers cake one Monday a month and fruit one Friday a month, as well as free theatre tickets and on-site massages.
Based on company earnings (before interest, taxes, depreciation and amortisation), which unlocks the bonus pool. Staff are awarded depending on their performance appraisal. Most receive up to 20% of salary. Those who earn more than £70,000 can earn up to 35% of salary.
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