Provident Financial - Annual Report & Accounts 2004

Our workplace

At the end of 2004 we employed over 8000 people across the UK and internationally. This flexible, skilled and motivated workforce is essential for us to meet our business objectives and we’re committed to creating a supportive working environment in which every one of these employees is encouraged to contribute and succeed. In this section we describe some of the key issues in the workplace and how we have responded to them. This sections focuses primarily on UK activities, for more specific examples of our international workplace activities please see the international section.

Employee development

We aim to ensure that all of our employees have the training and development they need to perform their roles effectively and fulfil their potential within the business. Most employees benefit from regular performance appraisals with their managers and have training and development opportunities ranging from comprehensive induction courses for all employees to MBA courses in some divisions. For the past 3 years, Provident and the Bradford University School of Management have joined forces in a unique programme of study intended to develop many of Provident's managers and equip them to tackle the wide range of new roles opening up within the company. The UK home credit business also implemented a manager development programme for first line managers looking to move up to area management level in 2004. Training opportunities are communicated to employees via a human resources intranet site.

During 2004 we collected data on the number of people undergoing training but realised that different divisions define training in different ways. In 2005 we aim to standardise this key performance indicator across all divisions.

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Employee involvement

Provident’s success depends on effective communications and good working relationships with our employees. To make sure we listen to what our employees have to say, we have introduced employee communication forums in our UK home credit division, the representatives of which are elected by fellow employees. The aim here was to break away from traditional, one way, top down, corporate communication and adopt a more consultative approach. Forum members canvass their colleagues and collect comments and opinions to discuss at forum meetings. They then feed back responses and ideas to senior management, who respond accordingly. Other divisions handle internal communications in different ways through regular business updates, team briefings, feedback forums, newsletters and the intranet.

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Diversity

Provident Financial is committed to employing a diverse workforce. Both the group and its individual employees stand to benefit from a workplace in which talented people can thrive and where a mix of backgrounds, cultures and outlooks means we’re better able to understand the needs of our customers around the world. We aim to create an inclusive work environment free from discrimination. To this end, we now have a diversity policy and managing diversity is included in the objectives or job descriptions of a growing number of managers. Their performance in this area forms part of their assessment and contributes to their performance related benefits.

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Gender
There are slightly more men (53.6 %) than women (46.4 %) working for Provident Financial in the UK. Given that men comprise 54.4 % of the general workforce (UK Labour Force Survey, Summer 2004), we appear to be more or less in line with national statistics.

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Our key performance indicator on gender has shown that only 15.9 % of senior manager posts in the UK are filled by women, even though they make up 46.4 % of Provident’s total employees. While this figure has increased since 2003, we feel this under-representation should be further investigated during 2005.

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Ethnic origin
Of our UK workforce, 96.9 % are white and 3.1 % come from minority ethnic communities according to available data. In contrast, minority ethnic communities make up 8.4 % of the working age population across the country (Annual Local Labour Force Survey 2004). Although new employees are invited to disclose their ethnic origin when they join Provident, this is voluntary and some employees choose not to do so. As a result, we believe our 2004 figures for ethnic origin are not fully accurate and so do not reflect our true ethnic profile. We plan to improve the quality of this data by collecting it in our UK employee survey. We are also working with Race for Opportunity in order to improve our performance in this area and will continue to refine our recruitment, selection and promotion practices to eliminate any unintentional barriers to under-represented groups.

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Age
Overall we have a similar age range to the economically active population in the UK, however, employees aged under 30 are under-represented and those over 30 are over-represented. Provident currently operates a normal retirement age of 65. Some of our employees have served over 40 years with the company and many have received long service awards.

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Disability
In 2004 Provident became a member of the Employers’ Forum on Disability, which provides advice and guidance on employing people with disabilities. Provident recognises its responsibility to make reasonable adjustments for new employees with disabilities and for people who develop disabilities during their employment. We believe that employing and promoting individuals on the basis of their abilities, skills and suitability for roles without reference to any discriminatory factors, will ensure both that employees experience a successful and enjoyable career within the company and that it will make full use of the different talents, experiences and skills that individuals possess. Currently disability is only voluntarily recorded during recruitment, therefore in 2005 we shall collect information on levels of disability within the organisation as part of our UK employee survey.

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Focus: Diversity
Figures from the DTI show that by 2010 only a third of the UK workforce will be male and under 45. In future, far more of the working population will consist of women, older people and those from minority ethnic groups. It's right that businesses should recognise these changes and ensure that their workforces reflect the communities in which they operate. As part of the long association between Provident and the West Yorkshire Playhouse in Leeds, Provident Insurance and the Playhouse arranged for 80 managers from both organisations to take part in a two-day training course to encourage greater awareness of cultural diversity, disability, race and gender. Funded by Art and Business Yorkshire through its New Partners programme, the course used role-play to help managers understand the issues and develop plans to recruit and manage a more diverse workforce. As a result of this course, we won the 2004 Arts, Business and Employees Award from Arts and Business Yorkshire.

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Human rights
Provident Financial respects the right of our employees to join trades unions. We comply with the fundamental International Labour Organisation (ILO) conventions, including freedom of association and elimination of child labour, and respect for human rights.

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Employee Turnover

High employee turnover is a big concern for any business and clearly affects performance. As well as the direct financial cost of replacing an employee, there are other repercussions such as potentially losing key skills, knowledge and experience, disruption to operations and a negative effect on morale. In the UK, Provident’s employee turnover is 23% in comparison to the UK average of 16% (Labour Force Survey, 2004).

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Grievance and whistle-blowing procedures

Provident seeks to deal responsibly, openly and professionally with any genuine concern that employees may have about malpractice. Grievance and whistle-blowing procedures are in place throughout the group. In UK home credit, employees can make use of a confidential telephone line to discuss anything that concerns them about the business. The line was first made available to conform to regulations on whistle-blowing, but its use has been extended to cover any employment issues that employees want to raise. Our motor insurance division also has a comprehensive set of grievance and whistle-blowing procedures.

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Remuneration

Our remuneration and benefits practices reflect the needs of our employees and workplace. We have a remuneration committee that meets five times per year and a remuneration policy to fix the remuneration of the Provident Financial board of directors. Further information on the remuneration framework for the Provident Financial board of directors can be found in the 2004 Annual Report and Accounts and on the web site at www.providentfinancial.com.

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Pensions

Today, one of the most significant issues in the workplace is the approach to long-term pension provision. The decline in the stock market over the last few years combined with increased life expectancy has left many companies that have traditionally provided a final salary scheme (where the pension payment is based on an employee's salary at retirement and length of service) with concerns about the increased risks they face, including funding obligations. Provident is no exception. We recognise that pensions are an important part of the total compensation package that we provide for our employees, and are increasingly aware that prospective employees take pensions into account when deciding upon a future employer. In 1999 we carried out an extensive review of the final salary schemes that were in place. With markets doing well, we kept the contributions at the same levels – the company paying 9% and members 6%. In 2000, however, stock markets began to decline. To compensate, the company increased its contribution to 16.6% in 2002 and to 31% in 2003. Even so, the pension fund faced a deficit. To control its costs, therefore, Provident introduced a stakeholder pension plan in January 2003 for new employees. Here the company contributes 8% and members 6% with the option of investing more if they choose. The scheme also includes benefits such as life assurance and long-term disability income protection. The new pension arrangement meets the group’s objective of minimising risk and also provides a strong framework for the future. Employees in this scheme receive newsletters and have access to a dedicated web site, which provides information on their funds.

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Health and safety

The group attaches great importance to the health and safety of its employees and other people who may be affected by its activities. The board has approved a group health and safety policy and a framework for health and safety. We have a group-wide health and safety strategy which is agreed at board level and then integrated into the business via the health and safety steering group. All new employees working in our UK head office attend a mandatory health and safety course that covers safety at work and staying safe on the way to and from work.

Most of our employees work in office-based jobs where one of the greatest risks to health is the improper use of display screen equipment. This can lead to ailments such as postural problems, headaches and strained vision. Whenever a new employee joins Provident, their work space is assessed by a trained member of staff and reasonable adjustments are made if required.

In 2005 we intend to try to standardise our accident and incident reporting across all divisions. The aim is to foster a safety culture in which people report and investigate all incidents and take appropriate action to prevent their recurrence.

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