HR professionals take on challenge of upwardly mobile phone sector

The boom enjoyed for so long by the mobile phone market is beginning to slow, making this a challenging sector for HR professionals. HR directors at three major players outline their experiences. Virginia Matthews and Georgina Fuller report. 


In terms of sheer customer numbers, O2’s 17.9 million users make it the biggest mobile phone operator in the UK. This former BT brand, now owned by Spanish telecommunications giant Telefonica, employs 11,000 staff – mostly at its Slough HQ, but also at call centres as far apart as Glasgow and Leeds – serviced by about 100 HR staff.

Former HR director Dominic Mahoney – who has recently been replaced by head of HR Ann Pickering – believes that O2’s current focus on offering a better customer experience, which dovetails perfectly with the quest to make O2 a visibly good place to work, is the right approach, particularly as the company’s employees and customers are, in many cases, one and the same.

“Since splitting from BT five years ago, we have grown our business very fast,” he says. “At the moment, further growth is less of a priority than making sure our existing customers are satisfied with our service, whether it is in our retail operation or via our service centres.”

Although the mobile industry has a striking reputation for ‘churn’ – both in terms of staff and customer retention – and for employing young and inexperienced staff, Mahoney says that O2 bucks the trend in both cases.

The average age of the workforce is late rather than early 20s, he says, while the employee turnover rate – already less than 20% – is, along with sickness absence, steadily going down.

As O2 grapples with what is fast becoming a saturated market in the UK, where a growing number of consumers have more than one mobile – and the really trendy have one to match every outfit – the skill sets required of the workforce are, says Mahoney, widening fast.

“In a more mature market, our priorities are inevitably changing,” he says.

“More than half of the workforce are now based in our call centres, and for those who remain, it is customer value, rather than extra gizmos and gadgets, that are the main focus of the operation.”

For staff, the move into new, more profitable areas such as street maps and broadband offers notably better and more mobile career opportunities.

Telefonica already has extensive experience of broadband, for example, and is keen for O2 staff to acquire and share their knowledge by moving around its different markets a philosophy that goes down well with the workforce.

The company’s ‘People Promise,’ which lays great emphasis on giving a warm welcome to new employees, is just one of the strategies being used to make O2 a “distinctive employer with high levels of engagement,” says Mahoney.

Employees also benefit from a more favourable tariff, plus a related friends-and-family offer, and a new bonus scheme called ‘Thanks A Million’, which gives every member of staff an extra £1,000 in their pay packet if the firm hits a particular target.

Last year, the company exceeded its target to attract one million new customers and duly paid out the money.

This year, says Mahoney, it’s all about customer satisfaction.

Carphone Warehouse

The Carphone Warehouse ‘promise’ is to provide better advice, better value, better service and better aftercare. And to head of HR, retail, Caroline Edwards – who oversees 5,500 staff in 750 stores – being better must also mean being more diverse, flexible and family-friendly as an employer.

“We currently have a 70/30 male/female split in retail, with most staff working on a full-time basis,” says Edwards, who joined the firm four-and-a-half years ago from an advertising and cinema background.

“Although this sector can look a bit male and ‘techie’ from the outside, we are currently looking at how we can attract more women into the business, particularly from non-technology sectors,” she says.

“We are also keen to make it easier for women to return to work after maternity leave and are currently reviewing our arrangements in this area.”

While Edwards describes basic pay and commission rates at Carphone Warehouse as “attractive”, there are plans afoot to link pay more closely to performance, and to reward the top-performing employees more generously.

Although sales will be a key factor in the pilot project to be unveiled by HR next year, the scheme will cover all inputs and outputs such as behaviour, mystery shopping exercises and customer complaint data.

Carphone Warehouse is consistently named as one of the Sunday Times’ Best Big Companies to Work For, and Edwards believes that the organisation’s preferential treatment arrangements – which give each employee a new handset every six months and offer both staff and their families reduced line rental – are “some of the best in class”.

“Our customers are our ambassadors, and if we want them to tell their friends to shop with us, we need to equip them with all the latest stuff,” says Edwards.

Other perks include ‘Deckchair Dosh’, which encourages qualifying staff to make full use of their paid holiday entitlement by boosting their earnings while they are away.

Carphone also offers a 10% discount on Talk Talk packages, special gifts when a member of staff gets married, and an unbreakable rule that no-one is allowed to work on their birthday.

“My biggest frustration is that I cannot always find good-quality HR people who understand that we are about more than just phones and can be true business partners,” says Edwards.

“My biggest excitement, though, is the great leadership team at Carphone Warehouse and the fact that HR is so absolutely aligned with the business strategy.”

As the market nears saturation point, the company, which claims a 22% share of business, is keen to be thought of as a one-stop shop for all mobile telecoms, rather than simply a phone shop.

It has recently launched the Geek Squad – a door-to-door troubleshooting service for technology-lovers in need of set-up help – and with the help of Talk Talk and car kits is now in full-on diversification mode.

Vodafone UK

Vodafone UK employs around 10,500 staff in nine offices across the UK. Most staff (80%) are employed in customer-facing roles across 346 retail stores and call centres.

Matthew Brearley joined the organisation in 2004 as an HR business partner and became UK HR director in June 2006. He began his career as an engineer and has previously held a number of senior-level HR roles in the retail sector, at B&Q and Marks and Spencer.

Brearley is clear about the challenges Vodafone UK faces in the competitive market of global communications.

“Our business is moving so fast, and entering new markets, such as accessing the internet through mobiles,” he says. “We have to adapt.”

Employee turnover across Vodafone UK stands at 21%, compared to the average 30% across the retail and customer service industries.

Brearley says developing and promoting the Vodafone UK brand has been a critical part of attracting and retaining good employees.

“We work really hard on our brand positioning and invest a lot of money in our sponsorship and advertising, so people want to work for us,” he explains.

However, Brear­ley does candidly admit that having a recognisable brand is not necessarily enough to always attract the best people in a highly competitive, emerging market.

“We’re in the top three or four of the FTSE 100 companies, but finding the people who have got the leadership capability to take us to the next level is difficult. The pool is small and we’re very discerning.”

Vodafone UK recruited about 3,040 staff in 2006 and 2,536 in 2005 but, Brearley says, the recruitment landscape is changing to meet the needs of an emerging market.

“We’ve done deals with Google, Yahoo!, My Space, YouTube and eBay. You need people who understand this new world and have the right skills.”

Vodafone UK’s retention strategy is, however, refreshingly simple.

“The most effective retention strategy is a great manager – it’s not an HR policy or process,” Brearley insists.

“Our job in HR is to find how to help select, promote, develop and create the capabilities for great managers. If the team doesn’t work, people will become disenfranchised and leave.”

Vodafone UK has a number of recognition and reward initiatives, including its ‘Legends’ scheme, which Brearley describes as “the pinnacle of recognition programmes”.

Employees across the business are trained as programme assessors and nominate their colleagues for the legends award. The scheme is managed by the HR team, but employees have complete autonomy over who they nominate.

“It’s nothing to do with management, hierarchy or status,” says Brearley.

The company received about 1,500 nominations for the last Legends programme, with a week in Cape Town, South Africa, for 100 staff, plus partners, as the prize.

Perhaps unsurprisingly, Brearley believes employee engagement is pivotal to company success.

“It’s about people who are motivated, productive and loyal to our organisation. We call them advocates – people who if you cut them in half will still say Vodafone. We’re on a drive to get more of these people.”

About two years ago, Vodafone UK began a new programme called the ’employee experience strategy’ based on a series of seven ‘touch points’. These included: organisational change, learning and development, reward and recognition, equality and diversity, and workplace environment.

“We touch our customers in so many ways,” says Brearley. “By phone, by e-mail, by retail stores. And whenever we touch a customer, we try and make it the best experience we can.”

Vodafone’s business objectives were then developed in conjunction with these employee touch points and measured quarterly, with a focus on local management. Brearley believes shareholders are becoming increasingly interested in ‘people’ issues.

“When I first started out in the HR profession, we didn’t have corporate social responsibility. Now, our shareholders understand that people practices drive the financial performance.”

And this applies across the business: “There’s a 100% correlation between employee satisfaction and customer satisfaction,” he says.

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