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May 2007

Recent IDS HR Studies

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March 2007
August 2006
Absence management
Alcohol and drug policies
i HR Studies Update
April 2007 Bonus schemes 843
April 2007 Childcare support 844 846 Employee engagement
Sept 2006 Clerical & secretarial pay 829 Feature
Oct 2006 Coaching in the workplace 831
June 2006 Employee health & well-being HR Update 823
Human capital measurement
Human capital measurement models are beginning to identify clear
June 2006 European Works Councils 824 links between HR metrics and initiatives on the one hand and
Nov 2006 Flexible working HR Update 834 business performance on the other. Drawing on the latest initiatives
at two of the leading players in this field, we show how employee
May 2006 Flexitime schemes 822 engagement has been identified as one of the key ‘human capital
July 2006 Harassment and bullying 826 drivers’ that can make a measurable difference to the bottom line.

Sept 2006 Hours and holidays 830

Case studies
Dec 2006 HR service centres 835
The Co-operative Group makes engagement a strategic priority
Jan 2007 Job evaluation Study+ 837
August 2006 London allowances 827 BT provides a ‘voice’ for staff with innovative ideas to share
Oct 2006 Long-term pay deals 832 The Royal Bank of Scotland Group links employee engagement to
improved business performance
May 2007 Managing stress 845
Feb 2007 Performance management 839 Employee commitment the key to success at Nationwide

July 2006 Promoting race equality 825 Deloitte sets up new employee brand team to drive engagement
Dec 2006 Secondments & volunteering 836 Building the employer brand at Cabot Financial
Feb 2007 Share incentive plans 840
GlaxoSmithKline looks to build engagement through health
Jan 2007 Shift pay 838 interventions
March 2007 Standby & call-out pay 841
Nov 2006 Violence against staff 833
benchmarking HR policy and practice
case study

The RBS Group links employee engagement to

improved business performance
The Royal Bank of Scotland Group is a world leader in human capital measurement activities. It has
developed a human capital model that correlates a range of HR metrics with business performance
indicators, showing how HR initiatives can have a direct impact on the bottom line. Employee
engagement is a key variable in the model – the group has shown that the more engaged
employees are, the greater the benefits for the business in terms of customer service and
productivity. The group continues to refine and extend its work in this area and has worked
extensively to align employee data with financial, marketing, sales, and customer information to
enable business leaders to make more informed people decisions.

The Royal Bank of Scotland Group (RBS) has join, stay or leave the group is likely to vary at
around 4,000 offices in 30 countries, serving 35 different stages of their life and career. So, for
million customers. The group, which now has example, those who are young and without a
around 135,000 employees, has quadrupled in family, may seek a high base salary, high quality
size in less than ten years. Its brands include RBS, management and generous holiday. In contrast,
NatWest, Ulster Bank, Direct Line, Tesco Personal those with a family may prioritise work location,
Finance and Citizens Bank. It has a market a flexible work schedule, availability of childcare
capitalisation of $127.5 billion. The UK accounts and role clarity. The make-up of the employee
for around 57 per cent of its operating profits. proposition also determines the extent to which
employees are engaged with the business.
People the key differentiator
The group has calculated that, on average, it
RBS recognises that if it is to deliver its goal of
takes ten months to repay the recruitment and
being ‘the world’s most admired bank’ and
onboarding cost of a new recruit. It is, therefore,
outperform others in the sector, the contribution
important to be aware of what motivates and
and performance of its staff is the key
engages new recruits so that they do not become
differentiator. To achieve this objective, RBS
disillusioned and leave before contributing to
places considerable importance on having HR
the business.
policies in place that impact positively on staff.
Furthermore, it has been able to show that by Using its human capital model, RBS can show
improving employee engagement, measurable what elements of its employee proposition and
improvements in business performance and which HR initiatives bolster employee engagement
profit levels can result. for different employee groups and, in turn, have a
positive impact on business performance.
The employee proposition
By building a compelling employee proposition,
RBS seeks to attract, engage and retain the best
The HCM model
talent. The overall employee proposition (see the At the core of the RBS human capital
diagram on page 18) consists of: measurement model is the concept that the
employee proposition drives engagement, which
● total reward then delivers superior business performance.
● work itself The model is populated by employee survey
data, employee data from the HR management
● recognition system and business performance data.
● performance & development Correlations and links can then be sought
● leadership between these different elements to determine
the key drivers of engagement, which ultimately
● relationships has an effect on the bottom line.
● product brands and reputation
Obtaining survey data
● work-life balance and physical environment.
Before it can make any correlations or links
RBS recognises that the extent to which each of between HR and business metrics, RBS has to
these elements influences whether employees establish what motivates employees in the first

i HR Studies Update 846 • May 2007 17

HR case study

The employee proposition at the Royal Bank of Scotland Group

• Working Hours • Leadership &

• Ways of Working Quality of Senior Team
• Workstation Design • Job Security

• Quality &
• Job-Related Skill Performance
Development Work-life • Image & Prestige
• Career Development Balance Leadership
• Role in Community
• Internal Mobility & Physical Product
• Performance
Performance Environment Brands &
& Development Reputation
• Informal
Recognition Work Itself
• Informal Manager • Interest
Feedback Total Reward
• Formal, Non-Financial
Relationships • Autonomy
• System/Process
Recognition Programmes • Tools &
• Salary Element
• Variable Pay • Manager
• RBSelect • Colleagues
• Retirement Benefits • Clients/Customers
• Sharing in Success

place. It obtains reliable and compatible data The characteristics of engaged employees
from across the group and across the employee Engaged employees are likely to be those who:
lifecycle through a number of different employee
surveys, including: ● Say – consistently speak positively about the
RBS Group to colleagues, potential
● employee opinion surveys employees, and customers
● joiner surveys ● Stay – have an intense desire to be a member
of the RBS Group
● leaver surveys
● Strive – exert extra effort and demonstrate
● targeted ‘pulse’ surveys. behaviours that contribute to business
These are supported and designed centrally to success.
avoid survey fatigue and ensure consistency of
approach. (The box on page 19 gives details of People data
the group’s annual global opinion survey.) Another key ingredient in the model is people
data (eg absence rates, labour turnover). The
Measuring employee engagement group’s employee data is pooled into a single
The surveys provide RBS with an understanding data warehouse from 25 systems worldwide to
of how employees judge their relationship with ensure consistent, reliable and single-source data.
the business. Rather than assessing levels of The Group has global definitions of its people
‘employee satisfaction’ or ‘commitment’, RBS metrics to ensure like-for-like comparisons for
uses what it regards as a much more relevant key measures such as labour turnover rates. The
measure – ‘employee engagement’. data can be segmented on the basis of tenure,
seniority, location, gender and age, for example.
A series of standard questions on employee
engagement allows meaningful comparisons to Influences on engagement
be made and to be benchmarked against external RBS calculates which elements of the employee
norms. proposition have the greatest influence on levels of
engagement and then prioritises the areas where
What is engagement?
the company will get ‘the best bang for its buck’.
RBS describes the distinction in the following
terms: if satisfaction is ‘How much I like things For example, the impact of a good manager can
here’ and commitment is ‘How much I want to have a significant impact on levels of
be here’, then engagement is ‘How much I want engagement. However, the organisational
to and actually do improve our business results’. impact of good managers is limited by their

18 i HR Studies Update 846 • May 2007

The Royal Bank of Scotland Group

spans of control (ie they can have a very positive

impact, but normally only on a relatively small The RBS Group’s global employee opinion survey
number of people). Much of the data for the human capital model comes from the
responses to the 100 or so questions that make up the Royal Bank of
In contrast, while reward is a weaker driver of
Scotland Group’s global opinion survey. This is carried out at the same
engagement, it has an effect across the whole
time every year in 30 countries and in nine languages. It covers
organisation. Therefore, investment in the 135,000 staff. The survey, completed anonymously, can be completed
design of an effective reward programme can, online or as hard copy. The survey plays a key role in the group’s
nonetheless, deliver significant group-wide employee listening strategy.
returns. An example of this is RBSelect, the
group’s flexible benefits scheme. Analysis has Standard set of questions
Questions are standardised across all of its operations, irrespective of
shown that engagement levels are up to 20 per
location, to enable easier comparisons. The latest survey saw greater
cent higher where employees choose at least
focus placed on leadership and management effectiveness, with 12
three flexible benefit options. new questions on this area.

Impact on the bottom line High participation rates

The various types of HR metrics allow RBS to The group has an outstanding employee response rate of 87 per cent.
This is 20 per cent higher than the financial services norm.
understand better what attracts people to the
organisation and what keeps them there. By Benchmarking the results
mapping the employee engagement scores with The responses are benchmarked against its global peers. In its most
other key people measures (such as the RBS recent survey (September 2006), RBS outperformed the global norm in
leadership effectiveness index) and against financial services in every one of 15 external benchmarking categories:
business metrics (such as the customer service
● communication
index, branch profitability and productivity), it
● employment security
can highlight any significant correlations.
● respect & diversity
Using various methods of statistical analysis, the ● innovation
group has been able to demonstrate links ● image & competitive position
between employee engagement and productivity ● recognition & reward
and staff turnover. ● co-operation and working relationships
● managing people & change
The group’s findings show that increases in
● RBS group leadership
engagement are matched by increases in
● divisional leadership
productivity and falls in employee turnover.
When the data is segmented by position, age ● workload & work-life balance
and tenure, it shows a positive correlation ● performance management & development
between seniority and engagement, a positive ● efficiency
overall correlation between age and ● customer focus
engagement, and that those with the longest ● job satisfaction & engagement
service exhibit high levels of engagement Communicating the results
(although the highest levels of engagement are The overall results are delivered by the chief executive, with each of
found in the first year of service, with a the group’s 4,500 divisions delivering local presentations. Online
subsequent dip). reports are delivered to managers, who then cascade the key
messages down to their teams. An online survey results toolkit and an
Positive effect on performance action planning guide help promote consistency and ensure that local
The data shows that engagement drives above action plans are agreed, communicated and triggered.
average performance, with those branches
employing staff with high levels of engagement Acting on the results
As well as a report for each individual business unit and broader
experiencing the highest levels of sales in
business results, there is a breakdown of the top and bottom ten
relation to their targets. Similarly, there is a scores and comparative data, set against key performance indicators.
positive correlation between the highest
customer satisfaction scores and high levels of How effective the group is in fixing problems brought to managers’
employee engagement. attention is key to maintaining a psychological bridge with
employees, while ensuring high response rates and high levels of
In financial terms, a one percentage point engagement. Examples of actions taken following the survey are the
reduction in turnover is estimated to save the setting up of a bureaucracy helpline – giving staff a way of alerting
business £30 million a year; similarly a 0.2 managers to any unnecessary bureaucracy or administrative
percentage point reduction in employee absence procedures – and a more flexible employee recognition scheme.
can lead to annual savings of £6 million.

i HR Studies Update 846 • May 2007 19

HR case study

The Royal Bank of Scotland Group's Integrated Human Capital Measurement Model
Employee Segmentation & Demographics
Example Inputs
Global People Work-Life Balance & Performance &
Data Physical Environment Development

Joiner Survey Business Metrics

➡ ➡

Recognition Relationships
Customer Service
Employee Branch Profitability
Survey Proposition Productivity
Cross-selling Ratio
Staff Turnover
Financial Performance
Pulse Survey

Total Reward Work Itself

Employee Product Brands & Reputation

Opinion Survey Support Measurement of
Human Resource
Acquisition and Business Initiatives

Leadership Incentive Design & Engagement Attraction Business Programme

Strategy eg values & service

Supports Predictive Analysis and

Informed Business Decisions

Encouraging practical use comparisons, for example, between different

call centres; staff can then access information
Rather than just another initiative from group
that shows how these figures correlate with
HR, the human capital model is intended to be a
data on engagement and on management and
living, diagnostic tool that businesses can use to
leadership effectiveness; one facility is ‘a pulse
improve their performance and benefit the
survey in a box’, which allows quick surveys
bottom line. For example, businesses can
to be carried out to a consistent template
identify reasons why staff doing similar types of
work have different levels of productivity or why ● reporting toolkit: access to internal reports
their customer service scores differ. such as the group board reports, workforce
profiles and access to external benchmarking
Online human capital toolkit reports
To facilitate wider business ownership, more ● benchmarking toolkit: in partnership with
than 1,000 HR staff across the group now have PricewaterhouseCoopers, competitor
access to a suite of online HR tools. Taken benchmarking reports for each division as
together, these form an extensive HR well as functional benchmarking reports,
knowledge-base. such as for technology, call centres and head
The toolkit has five workstreams: office departments; each business unit is able
to look for a suite of benchmark comparators
● survey toolkit: access to opinion survey
analysis, joiner and leaver surveys as well as ● research toolkit: access to internal research on
support for running pulse surveys and topics such as call centres, absence and
acquisition surveys – by simply clicking a turnover; also direct access to external
mouse, HR staff have access to all research sites; staff can also commission
presentations delivered at divisional, board customised research straight from their laptop
and executive level about the results of RBS ● measurement toolkit: access to absence,
employee surveys; they can drill down further turnover, flexible benefits and Sharesave
from the top-level findings to compare the toolkits – HR staff can compare the relative
survey results at the level of individual internal performance of their business in
questions and categories, and make internal areas such as absence and turnover.

20 i HR Studies Update 846 • May 2007

The Royal Bank of Scotland Group

Users also have access to HR Excellence (HR The toolkit has been so successful, that it is soon
leadership programme), What’s New to be launched in North America at the group’s
(information about new internal HR initiatives) Citizens Bank arm. The information base is
and Business Intelligence (a one-stop shop for being extended to have more global content,
business information relating to the Group and supporting businesses in Asia and the Middle
its competitors). When linking to various East. The aim is for the site to be a one-stop shop
websites, ‘silent authentication’, means that staff for all in-country resources.
do not have to repeatedly enter passwords.
Human capital board
Accessing the toolkit
Indicative of the importance attached to human
The ‘human capital toolkit’ is on a dedicated
capital measurement at RBS is the human capital
section of the RBS HR intranet. This provides a
board, which manages initiatives at a strategic
single point of access from the desktop PC to all
level. Meeting quarterly and reporting to the
human capital resources. Having all the HR
global HR board for the RBS Group, its
tools in one place avoids duplication and helps
membership includes the head of human capital
promote best practice. Moreover, the toolkit has
strategy, directors from a number of the
helped to increase ownership of the human
businesses and HR directors, as well as the
capital measurement concept, embedding it at all
group’s deputy chief economist. The make-up is
levels of the group.
intended to ensure that any human capital
As the introduction on the intranet explains: ‘The proposals are aligned to business needs.
toolkit helps you in the diagnosis of issues within
your business and is particularly valuable in the The board agrees priorities over a two-year
scoping of projects, in building business cases and timescale and discusses any emerging issues. For
comparing performance on people measures.’ example, after being highlighted at these
meetings, questions were included in the global
The toolkit allows HR staff to align more opinion survey to reflect the desire for greater
closely the service they offer with the needs of international analysis and to gauge the
the RBS businesses in which they work, effectiveness of the employee proposition
supporting their business in making informed
people decisions. HR business partners are on Discussion at such a senior level helps prioritise
the boards of the businesses for which they human capital initiatives across the RBS Group,
work so can add value at a high level. This while evaluating the effectiveness of any
means that there is something to show in proposals and then testing them against the
business terms for HR’s intervention. employee proposition.

Joining up decisions at the Royal Bank of Scotland Group

Marketing HR Sales Service

Joined up approach

More informed people and business decisions


Customer Sales Performance

Staff Opinion
Satisfaction Customer and
Index Staff Measures

i HR Studies Update 846 • May 2007 21

HR case study

Latest HCM initiative matched against the customer service measures

and business and financial performance in the
One of the group’s latest initiatives is termed
UK and US.
‘Service Excellence Through People’. Working
with its partners ISR (employee survey research) This analysis will enable the businesses to focus
and Harvard Business School, an interactive tool on bringing up the least performing branches to
is being developed to enable HR and line at least the level of those performing at the
managers to see the links and drivers for key midpoint. The survey data will help make clear
measures such as employee engagement, the areas to focus on to foster that improvement.
leadership, sales and customer service. This
initiative enables business leaders to view business
performance through a ‘single lens’ – delivering Helping to make the case for HR
insight into the effectiveness of RBS’s people The growth of RBS since 2000 has been matched
strategy and its impact on business performance. by an increase in the importance of the HR
function. Informed people decisions are now the
Across all of its businesses, seven areas of norm, as the impact of initiatives can be
employee performance have been identified as measured. The link between people – and
showing strong positive links with business and principally levels of engagement – and business
customer service performance metrics. These success is clear.
measures are:
The evidence-based approach of the model
● leadership allows a focus on outputs rather than inputs.
● engagement Now, for example, while knowing the monetary
● customer focus cost of training, HR business partners can show
the value that training adds – by making a
● image and competitive position difference to the level of mortgage sales, for
● managing people and change example. Businesses can leverage the value of
● efficiency and innovation staff and concentrate on HR initiatives that are
adding value.
● performance management and development.
Greig Aitken, Head of human capital strategy at
When mapped to the lead business metrics in
the Royal Bank of Scotland Group, sums up the
contact centres – such as average handling time,
achievements of the HCM model: ‘Making
call time, hold time, call wrap time and calls per
better use of all the data at the company’s
hour – the three centres with the highest score
disposal and then digging deeper to identify links
across the seven people measures outperformed
and correlations creates a “line of sight”
all the remaining centres consistently in business
between HR intervention and bottom-line
output. Essentially, higher scores across these
profitability. The human capital model is
seven people measures evidenced lower average
influencing the future performance of the
handling time, greater calls per hour, less
organisation. It allows the group to demonstrate
customer hold time and shorter wrap time.
a link between its people strategy, particularly
The concept is to be rolled out across the retail the prime role of engagement, and enhanced
branch network, where people metrics can be business performance.’

22 i HR Studies Update 846 • May 2007