Employee involvement is a big part of Asda Stores’ operational philosophy – and that can include a visit to the Dragons’ Den, says Tom Washington
There aren’t many jobs where making suggestions to your boss results in you pitching your idea to the formidable Dragons’ Den star Peter Jones. But at supermarket chain Asda Stores, it is not all about slapping the change in your pocket in TV adverts, as employees’ opinion and ideas are highly valued and actively encouraged.
Ever since former chief executive Archie Norman helped revive the ailing Asda business in the early 1990s, the company has striven to involve its workforce in its success. Norman, who later became a front-bench Tory MP, set up Tell Archie (now known as Tell Andy), a platform for staff to make their voice heard at the top of the organisation.
Fast forward almost two decades and Asda workers are now being asked to enter their ideas of how to run the business better into a Dragons’ Den-style competition, with the six finalists making presentations to a panel including current chief executive Andy Bond and top entrepreneur Peter Jones.
For reward manager Jayne Tory, schemes like this are a hugely important part of the total reward package at Asda, which is owned by US retail giant Wal-Mart. “Where I think we are industry-leading and ahead of the pack is in the things that are not necessarily about pay,” she says. “It is key to have a platform to make staff feel they are contributing to the business. We are always looking at what other ways we can really engage our colleagues to help achieve our goals, not with an extra 10 pence in their pay packet, but by saying ‘thank you’.”
One initiative, which Tory rates as her biggest career achievement to date, is an instant reward scheme that overhauled Asda’s previous performance incentive. Moving away from a cumbersome plan that involved employees being awarded points to save up for prizes, the new scheme enables managers and staff to reward their colleagues for a job well done. The initiative also claimed a runner-up spot for best motivation or incentive strategy at this year’s Employee Benefits Awards.
“With the previous scheme, employees did not see the immediate recognition for a job well done because it could take weeks before they received anything, especially as the onus was on the individual to claim their reward,” says Tory. “Now, cards with scratch-off reveal panels are in stores across the whole business. So either a colleague or a manager, who wants to recognise something a colleague has done, can obtain one of these cards and give it to the person in a huddle, so it is a group recognition. It might be a DVD, a CD, a bunch of flowers, a box of chocolates, or even permission to go home an hour earlier. It is an immediate ‘thank you’.”
Increased employee engagement
The immediacy and effectiveness of the scheme has already had an impact on employee engagement at Asda. One of the questions in its staff engagement survey states ‘I get thanked for a job well done’. Last year, 86% answered yes to this question, and the figure is up to 90% this year.
But the job of rewarding Asda’s workforce is not easy. With 165,000 staff – referred to by the company as “colleagues” – based in locations stretching from the south coast of England to Scotland and Northern Ireland, Asda has a very diverse workforce. Within that fact lies the challenge of knowing the make-up of a typical store, which can range from huge Asda Wal-Mart Supercentres to standard Asda stores, to smaller stores and Asda Living (non-food) stores.
Tory says it is vital for a business of Asda’s size to understand why its staff come to work. “Some are primary income earners, the main breadwinners in their family, so it is really important to them that they have regular work and feel they are in a stable business. A lot work for a second income. This is likely to be ladies who are supporting the family income. There are also a lot of youngsters, but equally a lot of older colleagues who are very important to the business.”
The diverse needs of its workforce has led Asda to provide many flexible working arrangements. These include Me Time, a scheme that allows staff to book time off for a child’s first day at school or a sports day, for example, or up to five days for the birth of a grandchild. The My Lifestyle scheme allows employees to take up to 12 weeks off work unpaid, either on a no-work basis or working on reduced hours for that period.
Asda’s Career Break arrangement permits staff with more than three years’ service and a good performance record to take anything from six months’ to three years’ unpaid leave. There are also opportunities for staff to take time off because of health issues or for parents to spend time with their family.
However, according to a staff survey this summer, the most valued benefit among staff is the 10% discount offered to all employees on all food and generalist goods sold in Asda stores. As with the company’s external message “Saving you money every day”, its reward package is designed to help employees’ pay go further. On top of the 10% staff discount, the retailer offers a wide range of voluntary perks, all detailed in a pocket-sized benefits booklet. It also implemented a salary sacrifice bikes-for-work scheme earlier this year, which has been taken up by more than 1,000 staff during two election windows.
Despite employing 165,000 people on an hourly-paid basis, Asda offers some competitive financial perks, too. Reward manager Jane Earnshaw, whose remit includes pay and bonuses, concedes the company pitches itself as medium in the market in terms of pay, but says it endeavours to structure its benefits package to make its holistic offering upper quartile.
This applies particularly to its bonus schemes. All staff are eligible for the annual bonus if they have worked for Asda for six months, or three months if they are salaried staff. In the retail sector, each store has individual performance measures and profit plan targets to meet, while staff in distribution centres have a bonus plan based on cost performance. Head-office employees’ bonus is based on total company profits.
“The bonus has been paid out at maximum for the past three years,” says Earnshaw. “The great thing is people are very aware of how the company is tracking it all the time, so there are no surprises at the end of the year, good or bad. There is continual communication of what needs to happen to improve performance and focusing everybody on the same goal.”
All employees can also join the company sharesave scheme, which is open to anyone with more than six months’ service. Considered to be the second most valued benefit among staff behind the employee discount, sharesave has been offered since 1982 and was retained by Wal-Mart when it took over Asda. Mike Hazlegrave, reward manager responsible for the share scheme, says Wal-Mart recognised the perk’s importance as a retention tool. “It is a great way to get colleagues to own a part of the business,” he says.
“We are in a little bit of a different situation to most UK companies because it is really difficult for our people to go out and buy Wal-Mart shares in the open market because it is an American company. The share plan gives our [employees] an advantage in that they can save money from their pay and also own part of Wal-Mart. There is a distinct correlation in labour turnover. In a store that has really good sharesave takeup, we find turnover is lower.”
Share scheme communication
One of the biggest challenges facing the share plan is keeping staff engaged with the US stock they are investing in. Hazlegrave explains: “There has been a big education and communication process around making the Wal-Mart share price easily available. We send the price out to stores daily so they can put it up for colleagues to see.”
This year, overall take-up within the 145,000 eligible staff was 19%, impressive for a sector not famed for its share scheme participation. The plan even increased take-up by 2% on last year, despite the recession. “It surprised us by going in a positive direction, which shows [staff] confidence in the Asda and Wal-Mart businesses,” says Hazlegrave.
Asda has considered implementing a share incentive plan (Sip) several times, including this summer, but has decided not to, remaining committed to sharesave. “As a retailer, it fits with our [employee] base. It is a no-risk plan,” says Hazlegrave.
“A Sip would only really benefit our 40% taxpayers, so we do not want to move from a plan that benefits all [employees] to one that benefits just higher earners.”
So, with a reward package aimed at saving staff money, yet still allows them to genuinely be involved in the success of the business, that really is “Asda price”
Benefits at Asda:
Defined contribution pension – one trust-based plan and one contract-based scheme
All-employee sharesave scheme Executive share option scheme
Voluntary healthcare and dental cash plan Private medical insurance for senior managers Health screening for some senior managers
Selection of discounted products, ranging from days out to retail vouchers Bikes-for-work and childcare vouchers
10% employee discount scheme in Asda stores
Various flexible working schemes, including time off for a child’s first day at school, the birth of a grandchild, and career breaks
Asda at a glance:
Asda Stores is a British supermarket chain that retails food, clothing, toys and general merchandise.
The company was founded as Associated Dairies and Farm Stores in 1949 in Leeds. It adopted the Asda name in 1965 when the Asquith chain of three supermarkets was merged with Associated Dairies.
Asda became a subsidiary of the American retail giant Wal-Mart, the world’s largest retailer, in 1999, and is the second largest store chain in the UK after Tesco, having overtaken Sainsbury’s in 2003.
Asda is Wal-Mart’s largest non-US subsidiary, and accounts for almost half of the company’s international sales. About 18 million customers a year visit its 369 stores in the UK.
Asda currently employs approximately 165,000 employees, 62% of whom work part-time. Its workforce comprises 41% male and 59% female staff.
Jane Earnshaw joined Asda more than 14 years ago as share plan manager in conjunction with the role of company secretarial assistant. At that time, she was responsible for managing and communicating company share schemes. After taking on the role of reward manager in 2004, Earnshaw’s duties now focus on executive, management and hourly pay strategy, as well as bonuses.
Mike Hazlegrave has worked for Asda for more than 35 years in various roles, including payroll manager and his current position as share plan manager. He was heavily involved in the introduction of an all-employee share plan in 1995 and, according to Earnshaw, is renowned for the communication material he has produced for the scheme.
Before joining Asda 15 years ago, Jayne Tory worked for restaurant chain Pizza Hut. Starting in an operations role in London’s West End, she then went on to help build the Pizza Hut business in Yorkshire and later became a national training manager. Tory joined Asda as training and development manager, before becoming reward manager in 2002. Since then, she has worked on perks such as the firm’s share plan, recognition scheme and, most recently, payroll.
Case Study: Cashing in on opportunities:
Linsey Taylor, general manager, optical and pharmacy at Asda, has been with the company for 10 years. She has worked in various buying roles, beginning in chilled pizza before moving into chilled foods, and then beers, wine and spirits.
In her current role, Taylor manages 25 head office staff in a team that ensures Asda’s specialist optical and pharmacy departments, which employ about 500 staff, run smoothly.
With the help of two colleagues, Taylor recently won the internal Dragons’ Den competition with an idea based on reducing the amount of stock Asda throws away by having an online auction to sell it to organisations that deal in surplus stock.
On pitching the idea to TV Dragon Peter Jones, Taylor says: “It was a bit scary and he did ask tough questions, but he was very encouraging and gave good advice.”
It is such non-financial benefits that Taylor cites as the biggest reasons many people stay at Asda. “I have made my way through two promotional programmes, so the business has developed me significantly with training and promotion opportunities. That is a benefit of working in a business this size.”
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