Due to industry regulation, there is a flurry of recruitment every five years, so Southern Water floods positions with perks to keep new staff, says Jamin Robertson
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Utility company Southern Water has poured around £2bn into infrastructure development over the past decade and earmarked a further £2bn for environmental and service improvements in the next five years across operations in Kent, Sussex, Hampshire and on the Isle of Wight.
With such massive investment underway, the firm is regularly reviewing its benefits package in support of its mission to be the UK’s premier water and sewerage company and to ensure it retains the skills of a 2,000-strong workforce. Perks are administered by a combined resourcing and development department, led by Chris Tate, resourcing and development manager, with recruitment led by Alex Chandler, HR business partner, whose remit will extend to reward management in the new year. "It was the right move to bring resourcing and development together. It’s an integral part of HR and it makes so much sense to have the whole system in one place, so there’s a seamless thread running through the whole life of somebody at Southern Water," says Tate.
Chandler agrees. "Careers have changed. While we may not offer a job for life, when they go back out into the marketplace after being with Southern Water for two years they’ve enhanced their employability." Benefits at Southern Water are an important component of the reward offering, with Tate admitting that some staff could be paid more elsewhere. "We’ll never be top payers but it isn’t just about the salary, it’s about the package of benefits we’re offering, and trying to make the organisation a good place to work."
The key role for benefits in the recruitment package at Southern Water is indicative of the entire water industry. Rob McPherson, information consultant at Hay Group Management, says a recent pay survey on the industry shows that a generous raft of benefits help to offset mid-range salaries. "[Hay research] shows they’re finding it difficult to recruit the calibre of staff they want, particularly engineers and senior purchasing roles. One of the interesting results of the survey showed 70% of water companies still offer a final salary pension scheme while the average base holiday is 26 [days]." Over 60% of employers also offer a degree of flexibility in their benefits scheme. "The benefits package tends to be more generous than you’d get in most other sectors," he adds.
Southern Water is currently implementing an online recruitment system, which is aimed at lifting some of the administrative burden of the company’s HR staff. Due to regulatory restrictions, the utility faces a major recruitment cycle on a five year basis. "Every five years Ofwat (the water industry regulator) decides how much we’re allowed to raise our bills by. At that point, we also have a large amount of capital we need to deliver during that time, so there is a huge scramble for qualified engineering specialists that can build and look after [our] assets," explains Chandler.
The latest round took place in April. "In reward, we’re ensuring we can attract the specialist skills we need, and to retain them long term," she says. A number of new benefits are currently in the pipeline. "Where we’ve come from in the past, as a PLC, we had been able to offer things like share schemes, and employee share ownership plans, which are seen as really attractive benefits. If we can’t offer that [now] then we have to look at what we can so we are giving something to our employees," adds Tate. The perks helping to bring staff through the doors at Southern Water are now a combination of old-fashioned and new initiatives. And they are offered to all employees, whether they are a call centre trainee or long-serving leakbuster.
Looking ahead, like many other organisations competing for a limited supply of talent, Southern Water is considering flexible benefits. "That’s the next big thing in our agenda for reward, we’ll be putting a feasibility study into that next year," says Chandler. Tate adds: "There will need to be restrictions, we wouldn’t want people to sell all their holiday." And in order to align personal with company ambitions, plans are afoot to introduce a performance-related bonus scheme.
"We’re at the very, very early stages, we want it to apply to everyone and along with flex we’re looking at that for next year, to tie in with those business objectives. The people that are managing those contracts and driving them through are key," says Chandler. She also has designs on total remuneration statements, to ensure employees understand the true value of their benefits package.
"People will start thinking, ‘okay what are the value of my benefits?’ I’ll look at embedding that and getting people more switched on then moving into flex, rather than launching it all at once." But first, there is a proposed employee assistance programme under evaluation. "We’re looking at the opportunity cost, and whether it’s feasible to introduce it across the board," she adds.
Among its existing voluntary benefits, Southern Water has recorded a £1.25m spend on its Lifestyles programme. Flagship discounts on holidays, product vouchers and CDs have driven that demand. And like many organisations, it now offers tax-efficient childcare vouchers, bikes for work and a home computing scheme. Southern Water has also held on to tried and tested perks that in many urban locations have long since been discarded. The subsidised restaurants at its main operational sites allow staff to buy a hot meal for around £2. "We’ve got a Tesco up the road but it is not like being in the town centre with a massive range. People can get away from their desk without having to go off site," says Chandler.
In addition to the practical advantages in providing on-site catering, there is an element of paternalism among the company’s long-established benefits. Southern Water’s staff social club, where employees contribute to regular jaunts to France, and participate in sports days, combine with company-funded open learning opportunities that teach skills such as bricklaying and sailing to implant an image of an employer that invests in the principle of work-life balance.
The sports club includes yoga classes and a two-day sports event incorporating tennis, rounders and golf. "Everyone who wants to, can have the afternoon off, there’s a buffet laid on, and everyone can have a chance to get together," says Tate. Chandler adds: "If I went to Chris [Tate] and said ‘I want to do a GCSE in Hindi’, well if there’s enough money in the pot that’s okay. We’re trying to provide a broader range of skills, in recognition that it’s not just work skills that make people perform at work, it’s giving the message that the firm cares about more than just developing good Excel skills." Tate sketches in the background: "For a long time we’ve had a philosophy of continuous learning, throughout the organisation. We want to try and encourage that. People come here and can do some vocational and non-vocational stuff. There’s computer stuff that isn’t necessarily related to work, child friendly [IT] programmes, [such as] learning to spell, science testing, and workers can bring their children in to use those facilities."
And in a further example of its corporate social responsibility aims, Southern Water participates in Water Aid, a charity working to develop better infrastructure in poverty-stricken regions of Asia and Africa. Last year, employees raised around £25,000. Staff also get two days paid leave each year to volunteer their services at a registered charity. To attract more key staff, Southern Water encourages people to recruit friends and family with a £500 bounty paid provided both are still with the company six months later.
"One of the best ways to recruit is through word of mouth. If people consider us to be a good firm, they will tell [others]," says Tate. Looking forward, with flexible benefits around the corner and mindful of the massive investment continually being poured into infrastructure, Tate says the wider challenge for the business will be keeping control of the purse strings: "It will be making sure we keep our capital spend on track, [as] there’s a huge amount of investment going on, and we’re going to make sure we’ve got the right assets in place to achieve our business plan. It’s a hell of a period of change. If there’s uncertainty, or insecurity, the more things you can do to make people feel comfortable in that environment, the more likely it is they will align to our objectives."
Case Study: Employee profile
Dean Ansermoz is a billing expert in business solutions for Southern Water’s Customer Services Transformation Programme. His career with Southern Water spans seven years, and he now works on the company’s billing system after a previous role as a customer service supervisor.
Ansermoz credits the tax-efficient bikes for work scheme introduced earlier this year for his good deal on a new ride: "It was all done quite quickly, we got a voucher in the post in a couple of weeks. The bike’s [specifications] were our own decision, we were allowed up to £1,000 to spend with savings of around a third."
Ansermoz has also been involved in the open learning scheme and is a member of the staff social club. "There are trips to France where we catch a coach in the morning and spend a day away, often bringing back a drink."
Southern Water at a glance
Southern Water provides drinking water for one million households in South East England, and treats and recycles soil and sewerage for nearly two million households. The company has changed hands regularly in recent times. In 1989, the top ten water and waste water companies were privatised. Formerly a PLC, Southern Water was sold to Scottish Power in 1996, and five years later it was passed on to First Aqua. Today, the biggest shareholder is Royal Bank of Scotland. The company employs around 2,000 staff, with its headquarters based in Worthing, Sussex. Industry regulator Ofwat recently rated the company as having the lowest leakage rate of all UK sewage and water companies. Southern Water had an average employee turnover rate of 7.7% for 2004-2005, compared with 6.8% for the previous year.
Benefits box
Work-life balance policies: Company-funded entitlement to education up to A-level standard. Non-vocational company-funded learning activities including bricklaying, upholstery and sailing.
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Charity donations: Staff donations to Water Aid supporting water provision in Asia and Africa, made via payroll. Up to two days per year work for charity organisations is allowed on company time.
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All-employee car ownership plan: Discounted Vauxhall or Saab cars for employees.
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Holidays: 25 days standard, rising according to service. An extra non-contractual day’s holiday made at the discretion of the chairman, usually Christmas Eve. Up to 5 days may be carried over to first two months of the new year.
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Tax-efficient benefits: Tax breaks on home computers and bikes for work.
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Pension: Stakeholder pension for new members. Employee contributions range from 3%-6%. Employer contributions of 6%-9% Sports and social club Company-funded sports days and a staff social club, including shopping trips.
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Voluntary benefits: P&MM Lifestyle package, including discounts on holidays, florists and vouchers.
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Subsidised restaurants: Subsidised lunch at Southern Water’s main sites, with hot meals costing around £2.