From its standing start in 1989, the Carphone Warehouse has been keen to retain its small company perks, but has had to adapt to recruit staff to support its move into new business areas, says Debbie Lovewell
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Carphone Warehouse has come a long way since its first store was opened in London by founder and current chief executive Charles Dunstone in 1989. From its single shop roots, it has now expanded into nine other European countries and owns more than 1,400 retail stores. It has also branched out of the mobile phone retail industry to offer insurance, and fixed-line telecommunications and broadband services. These moves have presented the business with a number of challenges. Cristina Jauregui, head of compensation and benefits, explains: “Our main challenge is growth. We want to grow new businesses to expand in telecommunications and expand existing business in a very competitive environment.” A key area of growth for the company is its move into fixed-line telecommunications services. Since the launch of its Talk Talk brand in 2003, it has acquired two overseas competitors and introduced a life-long free broadband offer for customers taking up its telephone services.
With other suppliers employing similar tactics, however, the pressure is on. “[One] objective for this year, and I think it’s probably the most challenging, is to become the leading alternative provider of fixed-line telecommunications. So basically be the alternative to BT. [Another] is to grow market share in all geographic markets. This will be done by investing in new store openings, generating like-for-like growth, developing additional distribution channels, and maintaining the same service quality,” she adds. Changing its direction as a business has led to challenges in recruiting a different type of staff, particularly IT specialists. “[One] change we have had to implement over the last few years is to change the benefits package for our IT staff [because] it was challenging to try to recruit people from IT companies with a retailer’s benefits package. Our recruitment people sometimes struggle.” Operating in such competitive industries, which rely on high levels of customer service in order to succeed, means that recruiting and retaining the right staff is vital.
But with the average length of service among Carphone Warehouse staff standing at just over two years and relatively low starting salaries, the company relies on its culture and benefits package to help attract staff. “You get a lot of young people where it’s their first job and they just want to earn money. I think the main attraction is the employee brand. Carphone Warehouse is a fun place to work. It’s a big company but it still has a small company mentality,” Jauregui explains. As it has grown, for example, Carphone Warehouse has retained a number of the qualities established at its beginning. One of these is its monthly ‘beer bust’, which is held on the last Friday of each month, where the company pays for drinks for employees at all of its sites.
Other motivational tools held over from its smaller days include its annual company ball to which employees’ partners are also invited, and its policy of offering staff opportunities for career progression through internal promotions. It has also taken a paternalistic approach to employee health and wellbeing, particularly in its contact centres. It is currently running an ongoing wellness programme called ‘Balance’, part of which recently saw a week dedicated to conference sessions for staff on topics such as the company’s employee assistance programme (EAP). “It’s good to have something out there that’s completely independent, that’s not your boss and won’t be judging you if you need advice. I know it sounds paternalistic, but a healthy employee is definitely going to be better at work than an unhealthy one,” says Jauregui.
The nature of the industries in which Carphone Warehouse operates mean that sales performance and good customer service levels are vital, so ensuring employees remain motivated is key to the business’ success. To reinforce this concept among staff, it has devised a list of five fundamental objectives which they must adhere to. “The first one is: if we don’t look after our customers, someone else will. That’s key, you have to really pamper your customers. The second one is: nothing is gained by winning an argument but losing a customer. The third fundamental is: always deliver what you promise. If in doubt under-promise and over-deliver. The fourth fundamental is: always treat a customer as we ourselves would like to be treated. The final one is a really important one, which is: the reputation of the whole company is in the hands of each individual. Those five fundamentals are extrapolated to our people. We expect people to provide quality work, to be trustworthy and to transmit that trust to others, to be owners of their own work and not just to pass it on,” explains Jauregui.
To ensure sales staff remain motivated, the company offers commission-based bonus schemes which can be adapted should it wish to promote specific products. Jauregui admits, however, that such schemes are not suitable for all areas of the business. “In retail, people love it. It’s what they’re used to and they really like it. They really do like that healthy competitiveness. I think sometimes it’s a bit more of a challenge – especially [with] the staff that are in central services – to try to implement that. I think maybe at that level, we’re not quite there yet.” But the scheme has not been without its problems. For many of the company’s sales staff, their commission payments account for a significant portion of their salaries, so some have been reluctant to take time off for fear of missing out. To deal with this problem the company has devised a scheme known as ‘deckchair dosh’, where employees are still entitled to a percentage of their average monthly commission payments while they are away. “People shouldn’t be penalised for taking time out, especially in an environment where probably 50% of their salary, if not more, is commission,” says Jauregui.
These type of incentive schemes, however, are becoming less common in the retail sector. Jon Bryant, head of flexible benefits at Jardine Lloyd Thompson, says: “We’re seeing a move away from commission schemes in the retail sector.” He attributes the trend to the negative affect on customer service levels often generated by the hard-sell approach of such schemes. However, Jauregui says this is not an issue facing the Carphone Warehouse. Typically, most schemes in the retail sector are designed around an organisation’s employee profile. “The nature of the demographic of the workforce plays a huge part in the nature of the benefits that are put in place,” adds Bryant. Employee share option plans also play a role in Carphone Warehouse’s retail incentive schemes, which Jauregui explains is aimed at creating a healthy competitiveness between store managers. Each year, all shops are measured against one another using a balanced scorecard approach.
At the end of the year, managers of the top 25% of stores receive an additional 50% of shares, while the bottom quartile lose the same amount. All employees are also eligible to participate in an annual sharesave scheme. “We want them to feel part of the company and feel that they can influence the results of the company,” she adds. That should help give Carphone Warehouse the support it needs as it tries to crack new markets.
Cristina Jauregui, head of compensation and benefits at the Carphone Warehouse, has experience of both sides of the compensation and benefits industry. After gaining a Master’s degree in human resources, she began her career in the field as a consultant. From there, she moved over to become a compensation and benefits practitioner in the telecommunications industry working for organisations such as France T™l™com and Vodafone. She joined Carphone Warehouse to take up her current role a year ago. Since then, she has been involved in a project aimed at providing the organisation with a more formal structure. “Carphone Warehouse is a massive company that has grown from scratch. It’s extremely flexible as there’s no banding structure in place so a lot of the things are hard to manage in terms of benefits, career progression [and] absolutely everything. So I’m working on a project now where I’m going to band everyone in the company, across the Group, not just the UK but also in Europe.” After an initial pilot, the banding system is due to be rolled out across the organisation this month.
Employee case study
Stakeholder scheme open to all employees after three months’ service. IT staff can join immediately. Only management staff receive employer contributions of 5% provided they contribute 2.5%
All employees can apply for private medical insurance. Staff must contribute 20% for single cover and 50% for any other type of cover such as family. All employees are eligible for income protection after six months’ service. A dental plan is also offered as a voluntary benefit.
Some 21 days as standard, rising to 26 days after 10 years’ service. Employees are also given a day off on their birthday.
Choice of company car or cash allowance for those with a business need and senior management. Junior management can take the cash allowance.
Flexible working arrangements. Enhanced maternity benefits.
Nursery and free gym at London-based head office.
Available at some locations.