Cadbury Schweppes on flexible benefits

Jamin Robertson visits sweet-maker Cadbury Schweppes to talk about flexible benefits.

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Concluding a whistle-stop visit of the Cadbury Schweppes offices based in clean and green Bournville, Birmingham, I trundle out of the company’s entry-by-invitation staff and visitor shop bound for London with a bulging bag of treats.

Forget flex for a moment. This sweet shop piles ’em high and the outlay of ¨£6.35 for enough chocolate to make you sweat off the stuff until Easter would in itself not be a bad perk for staff working for the global drinks-maker and confectioner. However, like a well-balanced diet, chocolate, boiled sweets and gum do not represent the foundation of a sound benefits package. So to offer staff something a little more substantial, Cadbury Schweppes relies on its well-established flexible benefits programme.

The current scheme, Choices Annual, was rolled out in 2002, when the new HR services department was created. While Choices brought consistency across all business units, flexible benefits has been offered here in various guises since 1997. Suzanne Laverick, UK employee benefits manager for Cadbury Schweppes, has been with the company for 15 years and, in the past few years, has overseen many of the developments in company benefits. "In 2002, we took the opportunity to harmonise all the terms and conditions [of all staff except manufacturing workers] and at the same time we harmonised the benefits on offer," she says.

Although the company gives some higher-grade employees a set flexible benefits allowance, most employees access the flex scheme by sacrificing a portion of their salary in exchange for Cadbury Schweppes buying benefits for them. This voluntary-come-flexible benefits hybrid is becoming more common as salary sacrifice blurs the lines of whether the employer of employee is really paying for the benefits. "We give certain employees, depending on their level within the business, allowances that they can spend on benefits. But, our flexible benefits package is open to all employees, so they can use part of their salary to fund any benefits that they want to take, and its all done through payroll deduction," explains Laverick.

The company also operates benefits through a special tax arrangement where any taxes payable on benefits taken are paid through payroll. "We have an agreement with the local Inland Revenue that means we can tax our benefits at source so none of the benefits that people choose actually go on to a P11D, its all done through our payroll, which makes life a hell of a lot easier," says Laverick.

Annual flex enrolment takes place during a four-week period between February and March and is managed in-house along with all other benefits administration by a benefits team of three who handle up to 300 calls a day during renewal periods. The team are based in Cadbury’s Bournville plant, along with HR services, other management functions and the manufacturing division of Cadbury Trebor Bassett. The building is set against manicured lawns and carefully maintained buildings and on a bright Birmingham day, the site is the antithesis of the stark industrial-looking enterprise one might expect.

Cadbury Schweppes has a long history as a paternalistic employer, with the suburb of Bournville founded upon George Cadbury’s Quaker-inspired vision of improved living conditions for workers. The company was among the first to offer staff medical and dental benefits and a contributory pension fund, while in 1911, it pioneered a dedicated savings and pension fund for women.

These days the focus is on flexible benefits and the perks currently generating the most interest are private medical insurance (PMI) and a home computing initiative, introduced last year. Signing up for PMI is encouraged by only offering staff who opt out of it half the cash value as an alternative.

"AA [membership] is one of the most popular ones as well, and that’s been quite popular in the manufacturing areas, simply due to the nature of the product, I think," says Laverick. And company car drivers opting for cash or downgrading their motor can spend spare cash on benefits. Reflecting a trend that cuts across all industries and pay grades, holiday trading is also dear to employees’ hearts and staff can buy an additional five days holiday a year.

Aside from eye-catching benefits such as PMI and holiday trading, other perks included in the flex scheme are various insurance products, a will writing service, childcare vouchers, legal protection and a tax return service, as well as health club membership.

Benefits managers do not sweat over take-up rates, as they are not the only yardstick by which success is measured: "One perfect example is Lifestyle Management, a new benefit that we’ve introduced. It’s not popular but it is different. We only have 20 to 25 people taking it, from over 6,000 staff, so it’s a small [number] of people, but those people really value the benefit. So we don’t tend to focus that much on utilisation rates."

In addition to its flexible benefits scheme Choices Annual, the company offers Choices Anytime, which is a purely voluntary benefits platform. These options are available universally to the 7,000 staff on the national payroll, and are extended to unmarried partners. Despite a good perception of flex, it is the voluntary programme that has the greater profile, with discounted family tickets to various attractions proving a real winner.

"Its quite difficult [to quantify success] because there’s a distinct difference between which benefits are popular within different groups. The core flex scheme tends to be more popular within our office-based employees [although] we’re doing quite a lot of communication on a one-to-one basis with our manufacturing employees," says Laverick.

With Cadbury Schweppes’ benefits managers relative veterans of running flex, Laverick is well-placed to observe its widening popularity: "A lot of companies are looking at [either flexible or voluntary benefits] and I think we’re quite unique in that we do both. Communication is key. Understand your audience and how best to get to them. Get employee feedback, and talk to people who’ve got flex programmes. We talk to people such as Lloyds TSB and companies like Michelin and, who are in very different industries but have had the same kinds of problems." As a large employer, the company ensures it makes use of its considerable resources such as IT support and the design of communications.

Laverick says benefits are currently in a holding pattern, as the company aims to embed the two schemes in employees’ minds. "People are starting to get used to the difference between the two programmes now, there was a lot of confusion between [flex] and [voluntary benefits] and how they worked, so we’ve been doing a huge amount of work communicating the difference. Rather than trying to change what we’ve got, we’re keeping benefits [constant] at the moment, and then next year we’ll be doing some research into how people feel [about the offer]."

Despite Laverick’s contention that there is not much happening at present, tinkering continues. Cadbury Schweppes will launch HR self-service portals in the next two months, and is considering flexing mobile phones.

With a great range of occupations, locations and age groups at Cadbury Schweppes, Laverick views the choice offered by flex as fundamental. "[I want] to give people… a range of benefits they can choose to meet their lifestyles, and [to be] flexible to their needs. Even people who haven’t actually used one of the benefits still value the fact the company has taken time to put something together they could use if they wanted to. People say it helps recruit and retain staff. We tell people one-to-one about benefits [when they start] and market it at the interview stage. We don’t have any evidence to prove [the impact on staff retention], we don’t measure it, but from speaking to people and the feedback that we get, I do think that flex adds to the total reward package."

Career profile

Suzanne Laverick, UK employee benefits manager for Cadbury Schweppes, joined the firm straight from school 15 years ago. She initially worked in new product developments, before training as a confectioner at Bournville.

Since then, she has held a number of jobs including a stint in finance and logistics at the company’s visitor attraction Cadbury World. Laverick joined the HR services team in 2002. "Don’t ask me how I ended up in HR," she jokes. The transition seems to have gone smoothly, however, as last year Laverick was appointed to her current role.

She is particularly proud of the company’s recent home computing scheme initiative. "Simply because it’s been so successful, it had a 10% take up in the first year." That was despite her conclusion that the promotion could have been better : "With the limited advertising that we did, we thought that was great."

At a glance

With a market capitalisation of ¨£10bn, Cadbury Schweppes is one of the largest international beverage and confectionery producers. Due to Cadbury’s merger with drinks giant Schweppes in 1969, the firm has two strands of origin.

John Cadbury opened a cocoa and chocolate enterprise in Birmingham in 1824, while in Switzerland Jacob Schweppe put the finishing touches to his carbonated mineral water back in 1783. A number of key acquisitions of household brands including North American brands Canada Dry and candy maker Adams, have helped to make Cadbury Schweppes the world’s biggest confectioner.

And in 2003, the acquisition of citrus drink brand Snapple pushed the company into the world’s top three soft drinks manufacturers. Internationally, Cadbury Schweppes employs a workforce of 55,000, with over 7,000 based in the UK.

The chocolate manufacturer has a large operation in Bournville, where, in 1905, the Cadbury brothers concocted the recipe for its top-selling Dairy Milk chocolate. The company’s half-year results for 2005 show that sales are up 6%, and earnings per share results of 8%.