What was the challenge you were trying to address?
At AB World Foods, we are a Real Living Wage employer. The majority of our lower-paid people are of long tenure and work in manufacturing. During the Covid pandemic, while some of us could work from home and behind screens, our manufacturing employees went into the factories everyday potentially putting themselves at heightened risk to keep food production lines and indeed the business going.
Normally pay reviews occur in December in our business. With the start of the Ukraine war in February 2022, my team and I were very conscious that resulting inflation was hitting these individuals disproportionately, and well ahead of the normal pay review cycle, so we decided to do something about it.
I and my HR team spoke to some of our employees to understand first-hand how the cost-of-living crisis was affecting them, and this proved a bit of a wake-up call. People were making lots of difficult trade-offs. For example, some were moving out of their current accommodation to reduce rents and in addition to rent. It was clear two other costs were putting people’s finances under pressure: food bills, and energy. We are a food manufacturer, so the sacrifices people were making to put food on the table were particularly poignant.
What did you do to address the challenge?
We introduced a percentage increase salary intervention (an early pay rise) for those paid below a certain threshold. This was something we had never done before, and we are doing it again in 2023.
We were more generous on how we viewed bonus calculations for lower-paid employees. All employees at AB World Foods have the ability to earn a bonus each year subject to personal and company performance.
A sister company was exploring options with an organisation called Salary Finance and by chance, two Fellows in my cohort were also involved with this organisation. This gave me some local knowledge and insight and we decided to introduce it at AB World Foods.
Salary Finance provides a way for employees to access financial assistance. Employees can consolidate their debts such as credit card debt with Salary Finance, usually at a much fairer level of interest, and then organise repayment of debt through their monthly salary payments.
We also introduced the Advance app. After listening to an expert from the Citizens Advice Bureau at a Forward Institute Collective Change session, it was clear that cash flow is key to helping with the rising cost of living. The Advance app helps with this. While system changes to payroll can be complicated – for example, we can’t easily move someone from monthly pay to weekly pay – with this app, individuals can take a loan of up to half their salary for a small fee, two weeks ahead of payday. In other words, the facility allows you to borrow against your salary ahead of time, and this can be very powerful for unexpected and one-off bills.
We promoted Salary Finance quite heavily and about a quarter of our employees at the lower end of the pay scale applied for it. To be honest, I was quite shocked at this level of uptake. Money worries are some of the biggest worries in your life so if we can do something to help with that, as a responsible employer, we would like to.
Was there anything else you did to support your workforce?
I believe it’s a truth in the British Army that an army marches on its stomach, and it’s also a truth for manufacturing employees as some of the work we ask people to do can be very physical. During the pandemic we offered free meals to our supply chain and on-site teams. As the cost- of-living crisis struck, we reintroduced this, offering free breakfasts twice a week or a free meal if someone was on a night shift, on top of normal subsidised meals. We are a food business after all!
In our employee shop, we brought prices down, increased our range and introduced staples such as rice and bread from our sister companies – which along with our curry sauces proved very popular. We had huge queues! Bread is a very emotive product because it’s absolutely something nutritious and affordable you can take home. We also did special offers and meal deals so people could feed their family for very good value.
We advertised our other benefit packages much more overtly. Managers did in-person sessions with their teams, we put up posters near drinks machines. Like many employers, we offer a benefits package with 10%+ off at major retailers and a Simply Health programme for everyone, which enables people to get financial contributions towards eye tests and dentist check-ups. We chose to cover the cost of Simply Health in full for the lowest-paid employees.
On the back of the Forward Institute sessions, we also ran initiatives to help people think more about finances. One thing that was really important was to get employees to understand the importance of pensions. Our company is quite progressive and generous in terms of pensions, so we were trying to persuade people not to opt out and also not to cut their pension contribution as a way to make savings. We invited the pensions team out to different parts of business to explain what is available and why it’s important.
What factors enabled all this to happen?
We were clearly already thinking about how to help our employees with the cost-of-living crisis, but the Forward Institute initiative and information sharing was very timely and gave me a big nudge personally.
As Managing Director, I’m in a position of power and I cast a long shadow, something I am very aware of. I can choose to cast my shadow in a positive way, and this can have a big influence. I have a deep-seated belief that we all have an equal right to be on this planet, and much about our personal circumstances can be down to luck. I was very conscious that I wanted to do something for those who had gone above and beyond during the pandemic, and frankly I'm also lucky to be in a business where I have a lot of autonomy, so if I want to do something, I mostly can.
I had two takeaways from the cost-of-living session run by the Forward Institute. Firstly, recognise the importance of cashflow. In business, companies don’t go bust because they’re not making a profit. More often, they go bust because they run out of cash. Cashflow is critical and it’s the same for individuals. I might have to wait four weeks for my salary but if I have a rent increase in two weeks then that salary hitting my bank account in four weeks may be too late. So that got me thinking: how do we help people with their cash flow?
The other thing was the stigma of debt. We don’t have debtor prisons anymore but there is still a sense of shame about getting into financial difficulties, and so I wanted to open up this conversation. We have a ‘smashing stigma’ programme at AB World Foods where we get people to share about life challenges, e.g. depression, anxiety, menopause, and talking about financial difficulties is another of these challenges. Encouraging an open conversation around this was important because saying “I’ve got into financial difficulty” is not an easy thing for people to admit.
What advice do you have for other Fellows?
Remember you can do quite a lot without incurring much cost for your business. It’s about finding things that have the maximum impact for the individual with a relatively low cost of execution for the business. There are a lot of things out there that you can do – it isn’t always about spending loads of money.
When you’re in a leadership position, your shadow can extend quite far so you need to look at how to do good with it.
Finally, it’s important to bring your team with you on any journey. You cannot do it all yourself. I talked to my team a fair amount about my responsible leadership journey and the Forward Institute programme. I included them in some of the materials I was learning. I invited my discussion group to one of my factories and got my team to talk to them about some of their initiatives and I offered my team some of the materials we were privy to.
Having kept them relatively appraised, my team were already conditioned to me talking about stuff, which meant I didn’t meet huge resistance from them when I wanted to do something. If you’re open and talk to people about what you’re learning, when you want to do something, it’s contextualised. I think that socialising something over time helps a lot rather than landing it out of the blue.
How has the Forward Institute initiative helped you drive change?
Contacts and network. The Forward Institute has put me in contact with experts that made me think differently about problems. I utilised the Fellows network to learn about Salary Finance. The sessions on ‘cash is king’ and ‘stigma of debt’ were also very valuable. I also got one of the Forward Institute contacts to present at one of our ‘smashing stigma’ sessions on depression.
The ‘return to the frontline’ initiative where we were encouraged to go back into the bowels of our organisation was a helpful nudge. Speaking with some of my employees at the start of this process, and despite us being a Real Living Wage employer, I was shocked at how many people in our business were facing real cost-of-living challenges. It is a good reminder of the dangers of being a leader and living in an ivory tower. How do you stay close to what is really going on in your business?
Overall, I think the Forward Institute programme has given me a few nudges, and more of a social conscience. Businesses need to be profitable, and I like making money for mine, but it’s not just about doing well. I want the business to do good too. Finding that balance is more art than science and often involves tricky trade-offs, but this programme and this cost-of-living initiative has perhaps swung the needle back just a little for me.