Staff

Commentary

Context CIS and The Co-operative Bank have reported on priority staff issues for a number of years. During 2003, all staff continued to be employed by either CIS or the bank through distinct contractual arrangements. At the end of 2003, there were 4,138 bank contracted staff and 9,763 CIS contracted staff - excluding 182 staff on maternity leave and 146 staff on career break or leave of absence. 22% of bank staff and 6% of CIS staff work part time. During the year, several central CFS functions were established - including Information Communications & Technology, Financial & Actuarial, Risk & Compliance, Marketing, Corporate Affairs and Resources. Staff within these central areas continue to be employed according to either CIS or bank terms and conditions. As a consequence, throughout the Report, discrete workforce statistics are reported for CIS and the bank. Attitudinal data is reported for CFS as a whole, which is now necessary as the development of CFS central functions renders CIS and bank year-on-year comparisons obsolete.

Staff turnover The bank experienced a staff turnover of 22% during 2003, which includes all leavers (2002: 13%). Turnover of bank staff is particularly high in the customer services areas - including smile, the branch network and call centres. The increase in bank figures is partly attributable to a change in reporting methodology; previously, only voluntary leavers were accounted for. With reference to all leavers, CIS experienced a staff turnover of 15% during 2003 (2002: 14%).  The Chartered Institute of Personnel and Development reports 20% turnover in relation to all leavers in 2002 for the finance, insurance and real estate sector.i

Outsourcing In recent years the bank has outsourced a number of its activities. The Financial Services Authority (FSA) is informed regarding material outsourcing arrangements as required. Follow this link for details of CFS' outsourcing. Going forward, CFS believes that outsourcing, and indeed insourcing, has a place in business organisation discussions. For example, in order to remain cost efficient and to continue offering a quality service to customers, credit card processing and cheque clearing are now outsourced, whilst in recent years, some fulfilment activities have been insourced. In 2003, CFS decided to outsource some 40 information technology roles to Specialist Computer Centres (SCC), an IT company that specialises in desktop support. Detailed discussions progressed with affected staff and trades unions; however there was a brief period of industrial dispute prior to a final agreement being reached. During 2003, the offshoring of UK call centre jobs to India and South East Asia became a 'hot topic'. Early in 2004, the bank issued a statement saying that it would not 'offshore' service centre work, as it was considered to be 'core' to the bank's high quality service offering.

Trades unions CIS and the bank recognise that trades unions have an important contribution to make to business and society as a whole. A National Joint Integration Committee has been established to bring representatives of all five trade unions and CFS Human Resources Management together to manage further integration of the two businesses. In October 2003, CFS' Chief Executive met with the General Secretaries of CFS' five recognised trades unions to outline the way forward for CFS. Regular meetings of this nature are to be held in the future. Following the initial meeting, ongoing consultation and negotiation has progressed on a range of subjects supporting the move towards a harmonisation of processes, policies, and terms and conditions.
Trades unions - Bank The bank has a partnership agreement with Unifi (around 60% of staff are members). This was first established in 1997 and aims to develop a new way of working together; one which helps ensure that industry changes are managed to the benefit of both parties. As part of the 2004 pay negotiations, the bank and Unifi have agreed a further twelve months partnership agreement. In 2003, bank staff received copies of 'Partnership at Work', a booklet that highlights some of the successes achieved by working in partnership (e.g., development of employment policies) and which aims to raise awareness of and support for the partnership agreement.
Trades unions - CIS Four trades unions are recognised (over 68% of CIS staff are members):  ACTS (Administrative, Clerical, Technical and Supervisory Group), which represents field staff management, administration and support staff and employees in Regional Selling Practice Centres; AMICUS, which represents head office and claims office staff; NACO (National Association of Co-operative Officials), which represents managers; and USDAW (Union of Shop, Distributive and Allied Workers), which represents financial advisers and catering staff.
 
'Project Lime' Bringing people together from different organisations and cultures is a substantial task. During 2003, Project Lime commenced, which involves reviewing existing CIS and bank working practices, people policies and terms and conditions of employment, and developing more 'harmonised' practices. The projects aims to support the creation of a single business approach across CFS, building on shared heritage and co-operative values. Much of the analysis and research underpinning the project has now been completed. There has been an audit and review of existing arrangements, complemented by research into best practice and future legislation. Recommended approaches will now be developed, discussed, agreed and tested. The project is led by the Human Resources Strategy Group, chaired by Ken Lewis, Resources Director. This group comprises senior managers from across CFS, who provide a 'steer' on Lime priorities, and review and agree the various recommendations. There is also close liaison with the recognised trades unions across CFS, who are working with CFS management through the 'National Joint Integration Committee'. A network of 'Business Champions' will be developed, to support the communication and implementation of the project.

Policy review 'Project Lime' has reviewed the operation of six priority employment policies across CIS and the bank: Equal Opportunities/ Diversity, Dignity at Work, Work/Life Balance, Well-being, Sickness Absence Management, and Disciplinary and Grievance. Underpinning the review has been a desire to recognise and consider best practice. The new policies will support business need and will meet, and in some instances go beyond, legislative requirements. Policy proposals will be developed during 2004, with the involvement of the Human Resources Strategy Group and Trades Unions.

Performance management Alongside the work of Project Lime, CFS initiated a 'culture change' programme during 2003. The starting point of the programme was a series of focus groups with some 250 managers throughout CFS. The focus groups sought to identify some of the prevailing behavioural and climate issues within CIS and the bank. The findings were presented to the CFS Executive Team and communicated back to focus group participants. During 2004, a series of development initiatives, focusing on leadership skills and managing change, is being implemented throughout the business to address the focus groups' findings. During 2003, CIS launched a new performance management system. This system includes a set of competencies that reflect four principal areas of behaviour: self-management, achieving, influencing/working with others and thinking. Building on CIS' and the bank's experience of performance management, during 2004 and 2005, CFS will introduce a common performance management system and behaviour framework for all staff.

Staff survey In February 2004, CIS and the bank undertook an opinion survey to which 62% of staff responded. This is the first time CIS has conducted an opinion survey that includes its Insurance Sales staff. Ideally, qualitative research would have been carried out with Insurance Sales staff prior to any quantitative survey work. However, it was considered that the priorities previously identified through qualitative dialogue with bank staff are sufficiently general to be applicable. Follow this link for details of staff priorities. The survey included questions on pay, benefits, working environment, personal development, discrimination, work/life balance and well-being.

Salary and benefits There has been an increase in the number of staff who agree that their pay is good (up three percentage points to 38%), however there has been a marked decrease in the number of staff who believe that benefits are good (down 15 percentage points to 50%).

Salary and benefits - Bank Average basic salary for bank staff in 2003 was £20,081 (2002: £19,411). In addition, bonus payments of 11.68% of basic salary (profit share and bonuses) were awarded to all eligible staff who met the basic requirements of their role. The bank continues to benchmark salaries against those of its competitors. Salaries are compared with 40 other financial services' organisations. For the majority of staff, the bank's salaries are positioned at or above the sector median. Total remuneration for 2003 was £95.5 million (2002: £92.5 million). This includes basic salary and all bonus payments (i.e. executive and senior management bonuses, staff bonus arrangements and regional allowances). During 2003, staff benefits continued to include a non-contributory, defined benefit ('final salary') pension scheme. Average contributions into the scheme in 2003 were equivalent to 15.6% of pensionable pay. Following a full actuarial review of the bank's pension scheme in April 2003, which indicated a £141.6 million funding shortfall (calculated according to FRS17), a revised contribution rate of 22% of pensionable pay has been recommended. The bank has informed staff that, from January 2005, they will be expected initially to contribute 2% of salary, rising to 6% over three years. Due to business funding, the full impact will not be experienced until 2010. The scheme remains open to new bank staff, who will pay 6% salary contributions from July 2004. A defined benefit pension arrangement continues to be provided, with the bank making substantial contributions, of at least 16% of pensionable pay, into the scheme.  Additional benefits include: holidays (21- 30 days) and work/life balance policies (including flexible working, a career break scheme, childcare vouchers, maternity, paternity and adoption leave).

Salary and benefits - CIS Average basic salary for CIS staff in 2003 was £20,068 (excluding Financial Advisers, who derive the majority of their income from sales commission). Total remuneration for 2003 was £287.7 million (2002: £295.6 million). This includes basic salary, commission and bonus payments. During 2003, CIS staff benefits included a contributory, defined benefit ('final salary') pension scheme. CIS currently pays 6.4% of the pensionable salary roll into the scheme, with the majority of staff contributing 6% of salary.  Additional benefits include: holidays (22 - 27 days) and work/life balance policies (including flexitime scheme, leave of absence, childcare vouchers, maternity, paternity and adoption leave).

Personal development and career opportunities Staff are generally happy with their personal development (up four percentage points to 72%), but fewer are satisfied with opportunities for career progression (38%). Overall, there has been a slight increase (to 44%) in the number of staff saying that managers have good people skills (2002: 42%).  CIS and the bank have achieved Investors in People accreditation for each organisation. This national quality award recognises organisations that improve performance by developing their employees.

Job security There has been an increase in the proportion of staff saying that they do not believe that the organisation maintains job security to the best of its ability (up twelve percentage points to 20%). These concerns are more pronounced for staff working in various CFS and CIS functions. Given the uncertainties associated with any process of organisational change, this decline is not unexpected. A major change programme is currently being developed. Staff confidence in job security is affected by this uncertainty, but will, hopefully, grow as the project develops. The bank's organisational change process, introduced in 2000 in consultation with UNIFI, recognises that any required redundancies will, wherever possible, be achieved on a voluntary basis. For bank contracted staff, once again, there were no involuntary redundancies in 2003. All nine redundancies (2002: 24) were on a voluntary basis. Changes at CIS are managed in consultation with affected staff and trades unions. For CIS contracted staff, there were 140 redundancies during 2003, the majority of which were involuntary. During a period of likely increase in organisational change, processes will be established to maximise the redeployment opportunities available to staff, and to support them through a period of change.

Work/life balance Whilst both CIS and the bank operated work/life balance policies during 2003, there has been a substantial decrease in the proportion of staff who are satisfied with their work/life balance. This decline is partly attributable to the inclusion of Insurance Sales staff in the survey population for the first time. Work/life balance is a particular issue for these staff, with 60% stating that they are unable to achieve a satisfactory balance. This may reflect the challenges associated with the less formal arrangements that characterise this type of work. Overall, it is envisaged that the launch of the CFS Work/Life Balance and Well-being Policies should help to improve staff satisfaction. Follow this link for further details on staff well-being. Both policies will include enhanced provisions, particularly compared with previous CIS policies.
Work/life balance - Bank During October 2003, the bank conducted an intranet-based staff survey to evaluate the effectiveness of its work/life balance options. 410 responses were received, with 9 in 10 staff stating that they were aware of the policies. 29% of staff stated that they had requested a flexible working option during the year, with 81% of this group  reporting that their request had been accepted. 78% of staff witnessing or experiencing flexible working felt that these working practices are successful. The results have informed the development of the new CFS Work/Life Balance Policy.

Communication Within CFS, consistent, open and honest communication is seen as an integral part of the drive to create a single employee community. In February 2004, 52% of staff said they were kept up to date with organisational change (2002: 55%). This slight decline is understandable given the considerable degree of organisational change currently underway across CFS. During 2003, CFS held a senior management conference with 170 delegates, which was followed by a management conference with 700 delegates. Subsequently, early in 2004, eight 'Executive Roadshows' have been held in locations across the UK, involving just over 1,000 delegates. Events have aimed to share CFS' vision with staff and all have been designed to encourage staff feedback as the integration of CIS and the bank proceeds. CFS introduced a range of new communications in the second half of 2003, which should improve ratings in future surveys. Communications include a structured Team Briefing process, which provides succinct information to managers on key topics to enable them to brief their staff effectively. A quarterly CFS staff magazine, 'Open' has been launched and a CFS 'landing site' has been introduced for the various CIS, bank and smile intranets.

Co-operative culture and ethical conduct 46% of staff agreed that they are fairly treated by the organisation (2002:58%), whilst 17% disagreed. 68% of staff state that they understand the organisation's co-operative culture and values and 60% agree that CFS implements its ethical and sustainability policies with integrity. During 2004, the Sustainable Development Team will work with the Learning and Development Team to ensure that CFS' ethical and sustainability positioning is a key element of the new orientation and induction programmes for new staff. In addition, publication of CFS' first Sustainability Report, along with tailored staff communications, should help to increase the proportion of staff who understand and trust in CFS' co-operative culture and ethical conduct.

i In accordance with the CIPD's definition, 'all leavers' relates to those individuals leaving the organisation by way of involuntary or voluntary severance, redundancies and retirements.