Acquisitive pub chain Punch Taverns has worked hard to integrate differing benefits offerings, says Kate Donovan
Punch Taverns has come a long way in a relatively short space of time, expanding through an almost continuous series of acquisitions since it was established in 1997 with 1,399 pubs bought from Bass. In the last three years alone, it has acquired companies such as the Innspired Group, Avebury Holdings, Millhouse Inns and Spirit Group resulting in a portfolio of approximately 8,400 pubs.
This latest acquisition resulted in Punch’s leased-pub business being combined with Spirit’s managed pubs. To reflect the structure of the business, Punch’s HR function is made up of three generalist teams: one for its leased business, one for its managed business and a central team dedicated to the group roles.
Anthony York, head of reward, and his team sit within the central HR function and are responsible for looking after benefits for the whole company. Following the acquisition of Spirit, his role has required aligning and extending a number of benefits for staff, a task which remains ongoing. “We are trying to mop up, create a service culture and also build a coherent future strategy,” explains York.
The company’s growth through acquisition, along with the nature of the business, also means that it has a diverse workforce, ranging from permanent salaried staff to shift workers, some of whom may be students working just a few hours a week. As a result, employees are entitled to varying levels of benefits and often have different historic expectations of their reward package.
He says that offering all employees the same benefits package is unrealistic. Instead, he believes it is important to acknowledge the difference between employees because individuals’ expectations tend to differ. “A lot of the idea with reward in this business is to exceed people’s individual expectations. The expectations of somebody doing a university course who comes in to do one shift a week on Friday night to get enough money to go out on the Saturday night are very different to the expectations of somebody who has a £30,000 a year job here,” York explains.
Like most businesses in the pub industry, Punch has a substantial transitory, hourly-paid workforce in its managed pubs, where staff turnover is unsurprisingly high. However, the company still makes an effort to ensure these employees are not neglected when it comes to perks. “We do offer them benefits but generally they are limited to things that we think would reduce turnover at a reasonable cost,” explains York.
As well as ensuring the company’s hourly-paid staff receive the basic suite of statutory benefits, Punch also tries to offer them some additional perks such as a discount voucher issued each month for 50% off food and drink at Punch-owned pubs and access to the company’s share incentive plan (Sip).
All Punch employees are eligible to join the Sip, into which they can invest a maximum of £125 a month or £1,500 a year. The company also matches staff contributions.
York explains that the Sip enables the company to share its success with employees and is a key example of how it uses reward to enhance and reward performance. “I think it’s a principle of the organisation and probably a symptom of where we have come from, that actually we really want our employees to think about driving the overall success of the business. When you look at our share price and what it has done, employees have significantly benefited from that,” he explains. Since Punch’s float in 2002 the share price has risen from 230p to 975p (as at October 26).
The Sip was extended to Spirit staff earlier this year. “We have a very high take up on the Sip. Prior to the launch into Spirit, we were running at about 64%-65% of employees in the Sip and we’ve achieved that in the head office population in Spirit as well.”
All employees are also eligible to participate in the company’s newly-launched recognition scheme, which was introduced this month. York expects that this will particularly help to motivate the more transitory section of Punch’s workforce.
The multi-tiered scheme, which is intended to incentivise strong performance and high levels of customer service, was inspired by a similar scheme previously offered to Spirit employees. Area managers can reward staff for positive behaviour using either set levels of cash rewards or a scratchcard through which staff can win either a £25 voucher to spend in Punch pubs, an experience day or a holiday. York believes the recognition scheme is an effective engagement tool.
To ensure that employees appreciate the value of benefits, the company issues paper-based annual total reward statements. Communicating the perks that are available to employees, however, isn’t always straightforward. “It’s actually probably one of the biggest challenges in this kind of retail business,” says York.
He endeavours to ensure that all employees are reached through its communcations, including those who only work for one shift a week. “We are careful that what we do is robust enough that we can embed it over a period of time rather than relying on big-bang pretty pictures and launches because it is very easy for a lot of people to miss [these],” York explains.
Payroll inserts, therefore, are a popular form of communicating benefits as everyone in the company receives a payslip.
Reducing staff turnover is a further issue for York. He believes the solution lies partly in working with the company’s specialist training and development team to help employees view the pub trade as being a career for life rather than as a stop gap.
Given Punch’s growth in recent years, career opportunities are certainly there. Following the spate of acquisitions, the business is now focused on driving maximum revenue from the pubs it currently owns. “Our future growth is going to have to be certainly more organically driven, if not the majority organically driven. I think reward will have an important part in that and benefits will form the bedrock of what we do in reward,” concludes York
Anthony York, head of reward at Punch Taverns, has not always worked employer-side. He first cut his teeth on benefits in pensions before switching to become a benefits consultant.
However, York finds that life in HR suits him well. “It is less of a science and more of an art,” says York, who made the move to work for an employer back in 2005, when he joined Spirit Group as a compensation and benefits manager. When Spirit was bought by Punch a year later, the HR teams from the two businesses were amalgamated and York took on his current role. Prior to this, Punch Taverns had no specialist reward function and benefits were looked after by wider HR generalists.
Leading a reward team was not part of York’s original career plan. After studying maths at university, he worked at Windsor Life Assurance undertaking pension review work before spending a stint in the compliance unit of Bacon & Woodrow (now part of Hewitt Associates), and studying to be an actuary. From here, he moved to Towers Perrin to be a benefits strategy consultant.
Punch Taverns at a glance
Formed in 1997, Punch Taverns is a publicly-owned pub company which runs a combined leased and managed estate. In 2002, the company floated on the London Stock Exchange.
The company has grown through a number of acquisitions, and in January 2006 acquired the Spirit Group pub company. It now has a portfolio of approximately 8,400 leased and managed pubs.
For the 28 weeks ending March 2, Punch generated an EBITDA of £340m and a profit before tax and asset sales of £130m, up 26% and 12% respectively on the same period last year.
Following the acquisition of Spirit there are effectively two operational businesses. The Punch Taverns side of the business covers leased pubs, while the Spirit side consists of managed pubs.
Where practicable, employees have been aligned to one of the two arms of the business, resulting in two separate internal structures with distinct management teams. There is also a team at the centre providing resources across the company.
Although Punch employs approximately 20,000 staff in total, this number is subject to considerable seasonal variation. Of those 20,000, about 3,000 are permanent salaried employees.
What are the benefits?
Group personal pension (GPP) for all employees who are not paid on an hourly basis. Fixed contributions of 2% from employees and 7% from the employer. New starters automatically receive a meeting with a pension adviser while other employees are given regular opportunities to sign up for a meeting.
Punch employees have a leased car option while former Spirit staff have an employee car ownership plan (Ecop). The company is looking to create a single policy early next year.
Private medical insurance for employees at management grade upwards.Dental cover available to all annual salaried staff. Eye care vouchers for visual display users.
Annual bonus for most non-hourly salaried employees, based on a combination of company, team or division, and individual performance.
Discounted gym membership. Access to discounts through the company intranet. Bikes-for-work scheme, which is run intermittently. All are available to all staff.
Social clubs and catering perks
A funded social committee that organises events such as a family fun days. Part-subsidised canteens for employees on each of the two main head office sites. Half price food and drink for all staff at pubs owned by Punch Taverns.
Share incentive plan (Sip) for all employees.
Case Study: Pucnh Taverns
Punch shares success
Caroline Jackson, a telesales manager, has worked for Punch Taverns for three-and-a-half years. She explains that being part of its share scheme increases her interest in the organisation’s financial wellbeing.
Jackson invests the maximum £125 a month from her salary into the share incentive plan (Sip). After the company has matched this contribution, she has a total of £250 going into the scheme each month.
The contribution from her employer has impressed Jackson. “Schemes at other companies I’ve worked for were non-funded so I paid the full £250 whereas when I joined Punch, with its 50/50 split, I actually checked to make sure I hadn’t mis-read it because I think that’s absolutely fantastic.” Her participation in the scheme ensures Jackson actively watches the company’s share price, which is also published on Punch’s intranet site. “It’s an excellent way of investing in the company and receiving something back. It means I take an interest in what’s happening from a financial point of view,” she explains.
Jackson is also a member of the company’s group personal pension plan (GPP), into which she puts in 2% and Punch contributes 7%. “My background is in financial services so I understand the importance of pension planning, and planning at a very early age,” she says.