Elements of Success in Lloyds - Case Study Example

Elements of Success in Lloyds TSB's Total Rewards Programme Beyond Traditional Banking - The Wider Agenda The origins of Lloyds go back to the 18th century and with a series of mergers, most recently TSB, the company has become one of the leading banking and finance organisations in the world, as well as in the UK. In the last century, traditional companies such as Lloyds offered job security with a job for life, while the newer companies offered exciting surroundings with stock options and no job security. Demographic changes have created the need for all employers to look at the bigger picture with job security no longer a guarantee and stock options apt to plummet in value. Choice and flexibility for employees have become key elements. It has been necessary for Lloyds TSB to rethink their entire business practice and look to the future to secure their standing in the business world. Online banking at Lloyds TSB offers a multitude of opportunities for customers, giving a more streamlined and much faster method of banking, which in turn facilitates an employee's ability to do his or her job. In the process of expansion, the company has combined with Xbridge, the UK's leading online business finance analyst to develop Lloyds TSB Commercial Finance, the biggest brand for commercial finance in the online medium. The most recent programme introduced within the company to improve business practices is called Total Reward, and its basic principles call for more than a financial package as an employee incentive. It calls for non-financial rewards such as the opportunity to develop skills and have input into the work schedule. Total Reward Throughout the Organisation What are the elements that make up Total Reward and how do they apply to Lloyds TSB Total Reward is defined as a programme that "brings learning and development together with aspects of the working environment into the benefit package" (CIPD, 2005). The concept is that when employees are included in organisational decisions, they will feel more connected and more responsible for improving the working environment. According to Armstrong and Brown (2001), the main components of Total Reward are as follows: 1. Financial rewards, including base pay, variable pay, share ownership and benefits. 2. Non-financial rewards, including recognition, opportunities to develop skills, upper-level opportunities and increased quality of work day. In Total Reward it is necessary to align HR and business needs with employee needs, acknowledging tangible and intangible rewards within the wider context of work experience. It is a new program, not fully embraced in the marketplace (CIPD, 2005). The concept is that when employees are included in organisational decisions, they will feel more connected and more responsible for improving the working environment. Because relatively few companies in the UK are successfully operating flexible benefits plans, there is no off-the-shelf package that companies can begin using immediately. The question here is the way in which Lloyds TSB is utilizing Total Rewards. What obstacles, if any, are they facing as they build a new programme for their company Management as a Balancing Act In today's employment market, a broader view of how to acquire and retain the best employees is no longer a matter of simply offering a competitive salary and benefits. A business that keeps up with current needs and new procedures has an advantage. Management has to know how to implement the employee pool in a way that creates harmony throughout the company (Hay Group, 2005). In addition, the public must feel that their interests are being addressed in the best possible way. This balancing act is difficult to achieve, but if the company is willing to learn from past mistakes and meet new challenges as they arise, a workable system can be achieved. Has Lloyds TSB Bank plc evolved in a way that will keep their organisation in a growth mode, keeping up with changes as they occur The ongoing debate is where to draw the line between personal and business needs. It is much easier to set up a financial package than it is to address the personal interests of employees, especially in a company as large as Lloyds. It is also important for line managers to embrace the company goals for Total Reward. Otherwise, the plan becomes bogged down and will fail in the long run. What has Lloyds done to offset possible problems in line management And how are they addressing the personal interests of their employees Lloyds offers employees competitive pay, as well as a minimum of 22 days' holiday bonuses, and incentives called "flavours" (Lloyds, 2005). These incentives are an innovative and integrated list of rewards that are intended to make employees feel they have an input into company policies. According to Lloyds: With flavours, you have more choices for your money - plus variety in the way you can invest, save and buy benefits. The choice is yours. You will receive a cash sum each month with your salary, which you can use to take advantage of benefits from the range on offer or simply take the cash. You could sell some of your benefits for cash - for example up to five days holiday or you could use some of your salary, as well as the cash sum, to take advantage of additional benefits. ("Flavours, par. 1) As part of flavours incentives, Lloyd's shareplan includes free shares given to eligible employees each year, plus partnership shares that can be bought each month and what are called "matching shares" with some of the partnership shares matched with free Lloyds TSB shares. The shares are tax free if an employee stays with the Group and leaves the shares in the plan for five years. Employees have the opportunity to open a savings scheme called sharesave with a guaranteed tax-free bonus and the option to buy shares at a discount with their bonus. Further benefits offered by Lloyds are discounts on products such as car hire, holidays and health clubs. There is also an option to buy or sell up to five days of annual holiday to give greater flexibility. Health care options are available, and flexible working arrangements and variable daily hours can be set up to balance work and home. Choice seems to be the key word in Lloyds' benefits, and it seems obvious that they have embraced the Total Rewards programme in its entirety, but although it would appear on the surface that they offer a complex and diverse set of rewards, every new programme has its weaknesses. The list of "flavours" doesn't really mention an employee's ability to offer management suggestions that will be given careful attention. As noted earlier, the attitude of line management toward employee concerns can encourage or discourage employee input, bringing to a standstill any attempt at organisational unity. Developing management practice to best implement a Total Reward package is a priority. In terms of educational opportunities, with a company university and the ability to gain on-the-job training with online access via the Internet, employees can take advantage of accredited and certified programmes that will recognize professional learning and offer opportunities for a higher status. The company also offers an online job search site and a Career Centre to allow for interaction between job seekers and company openings as employees increase their learning. There should be no obstacle to employee advancement, and the best manager will encourage employees to take advantage of the opportunities offered them. As for management issues that might arise, both managers and employees should be evaluated on a balanced set of performance outcomes. It is important to make sure the ways in which the company measures, evaluates and rewards their managers as well as their employees are balanced. Rieger and deKoning (2003) suggest certain steps to take in evaluating the Total Reward programme at specific intervals. As reward programmes evolve, it is important, they say, to go back and re-evaluate various decisions made to be sure the best value is being offered at any given time. Effectiveness and cost must be considered. The "balanced scorecard" is a popular approach to evaluating performance, rather than focusing on financial gains. This is effective only when managers are in sync with their employees. A balanced scorecard requires employee, management, and customer engagement as well as financial and operational performance. Its success is based on regular evaluation of the programme. Online Banking - Expanding the Workplace Is it possible that branch managers will be phased out with the evolution of something called Customer Relationship Management (CRM) In the 21st century, the online channel has become the most direct route to market outside of branch network for key product lines. In a survey taken before the events of September 11, Rodrigues (2001), found that the most successful implementation of CRM was achieved when deep customer information sources were utilized and when the CEO prioritized the programme as a corporate strategic objective. Lloyds was only one of many companies surveyed, and results specific to the company cannot be included here, but this is a programme that will increase in importance and must be considered in looking at the future of Lloyds TSB. What exactly is CRM According to Rodrigues, there are many interpretations of the term. The survey focused on the business to customer (B2C) sector, and it was determined that CRM is not an IT initiative. It relates more to business processes and is a cultural/organisation issue. It is a mechanism for knowing who your customers are, not a specific programme but a philosophy and mind set, and it needs as much attention to employees as to customers. Data is a key requirement. At the current time in the business sector, customer relationships have joined with employee relationships to create a people-oriented approach to business. Branch managers have always provided information on their customers, and this information has made it possible for upper management to create a more personal relationship with their customer base. With the advent of CRM, far more information is available, but the one-on-one relationship possible in the branches adds an element that cannot be achieved online. Even as CRM becomes established, the branch manager is still a necessary part of business. Online Financing When Lloyds TSB joined with Xbridge (Case Studies, 2004, pp. 17-18) to develop their online financial brand, the result was their very successful Lloyds TSB Commercial Finance, but instituting the programme was never easy. In today's society, with online consumers expecting next-day delivery on services, response times had to be short. Because Lloyds wanted product solutions based on customer needs rather than fitting business into a specific product, it was necessary to find a way to place all four of Lloyds' asset-based lending brands under one online umbrella, which they named "Lloyds TSB Commercial Finance." Each client's current needs are addressed with the solution based on needs. According to Ted Ettershank, Managing Director, it's a "one-stop shop approach with seamless delivery of financial solutions for each client" (Case Studies, 2004, p. 18). Meeting Goals for the Future Lloyds TSB offers training and development programmes for employees with innovative employment policies and practices. There is no doubt that the company has made a commitment to the concepts of Total Reward. They also offer an online job search site and a Career Centre to allow for interaction between job seekers and company openings (Lloyds TSB You First (2006). The ongoing debate, however, is where to draw the line between personal and business needs. It is much easier to set up a financial package than it is to address the personal interests of employees. It is also important for line managers to embrace the company goals for Total Reward. Otherwise, the plan becomes bogged down and will fail in the long run. A world marketplace is becoming the main conduit for any business hoping to lead in services and input. Lloyds TSB has shown its awareness of this development by making a commitment to the European Foundation for Quality Management. The aim of the EFQM is to help European businesses make better products and deliver improved services through the effective use of management practices. The theme for Cardiff 2005 was how European organisations would manage the significant challenges of the next decade, one which will see unprecedented change. Lloyds TSB, along with several other organisations, helped underwrite the EFQM 2005 Cardiff Conference, and David Hussey, Head of Continuous Improvement for Lloyds and chair of the forum's theme committee, made Lloyds' future goals evident when he said, "At Lloyds TSB we believe that it is more important than ever to be aware and responsive to the factors that will shape markets in the future. The EFQM forum in Cardiff 2005 provides an excellent opportunity for European companies to develop relationships with like minded organisations and learn about new challenges, leading edge techniques and capabilities that will be invaluable in order to thrive in the next decade" ((Lloyds TSB: About Lloyds TSB, 2005). In addition to worldwide concerns in the business community, corporate responsibility is considered a priority in local communities. Social and environmental issues have been presented in a printed report and a customer leaflet is available to address customer and employee needs. Lloyds TSB has made an effort to be known in the business world as "trustworthy, honest and responsible," and in this respect has guided many small businesses as they made an entry into the community. This label also belongs to employees who have engaged in volunteer work, collecting on behalf of charities, and those who have taken advantage of employee conferences such as an Ethnic Group Minority conference. One program set up to interact with the community is called "Note by Note," with schools provided with workshops, concert tickets, and instruments at discount. Customer needs are also addressed by Lloyds TSB, with a myriad of services available, especially for online banking. Whether a customer wants a savings account, a chequing account, a share account, or a credit card, the bank offers a step-by-step procedure, intended to simplify the process. What Issues Still Need to be Addressed Lloyds TSB has made every effort on its website to cover any area that a customer or a future employee might want to explore. Every question would seem to have an answer. The website design is quite exceptional, and navigating it is not at all difficult. It is, however, a website intended to sell the company, and it does this very well. What is less evident, however, is any weakness that might be discovered if an employee chooses to take a position with the organisation or if a customer chooses the online route for banking. In exploring the online route for banking, the first suggestion on the website for prospective banking customers is Internet banking. The site provides an interactive demonstration, but it is necessary to sign in to view the demonstration. In other words, in order to appreciate the benefits of online banking, the customer must first make a commitment to use it. Once a commitment has been made, cashpoint machines offer instant money and automated phone service provides access for transactions. For those who find themselves overwhelmed by automation and feel the lack of personal services, the company does offer a free 45-minute personal review with a Personal Account Manager at a local branch. Many online websites in business offer live online help, with the customer able to sign in with questions that can be answered immediately. The major problem with automation is the personal element, the question that cannot be answered under FAQ. This service was not mentioned in the Lloyds TSB website. Perhaps it does exist but only for registered customers. If not, it would be a major incentive for anyone interested in organising or setting up their financial affairs, whether on a personal or a business level. The final issue to be addressed in online banking is, of course, the security issue. Banks have been inundated with "phishing", also known as "carding" or "brand spoofing" (Bitpipe Dictionary, 2006). This is an Internet scam utilizing e-mails that appear legitimate but are just tricks to gain personal information such as credit card numbers, PIN numbers, banking numbers and passwords. For a time, this caused a great deal of difficulty, especially for banks, but security measures to make sure customers are at a legitimate banking site have been put into place, creating layers of security with the use of information that only the customer has. What similar difficulties might arise as the use of electronic devices continues to increase is impossible to predict, but Lloyds TSB would appear to be on the lookout for obstacles that might create difficulty as they go more and more into online banking practices. Obviously, one of the most necessary areas of expertise for employees would be the ability to work easily online, and Lloyds TSB does offer workshops to improve this area. References Armstrong, M. and Brown, D. (2001) New dimensions in pay management. Developing practice. London, Chartered Institute of Personnel and Development. Bitpipe Dictionary (2006). "Phishing", retrieved 2-20-2006, from http://www.bitpipe.com/tlist/Phishing.html Case Studies: Xbridge and Lloyds TSB (2004), retrieved 2-20-2006, from http://www.theusabilitycompany.com/news/media_coverage/pdfs/2004/0404_net_imperative_online%20financial_services.pdf, pp. 17-18. CIPD (2005). "Total reward factsheet," retrieved 2-19-2006, from http://www.cipd.co.uk/subjects/pay/general/totrewdqf.htmIsSrchRes=1 Lloyds TSB You First (2005), "About Lloyds TSB," retrieved 2-20-2006, from http://www.lloydstsb.com/about_ltsb/efqm.asp Hay Group (2005), "Managing Total Reward," retrieved 2-19-2006, from http://www.haygroup.co.uk/Services_Lines/Commitment/Reward_Manage_Total.aspGoTo=Expertise Lloyds TSB Corporate Responsibility (2005), retrieved 2-20-2006, from http://www.lloydstsb.com/about_ltsb/corporate_responsibility.asp Lloyds TSB (2005). "Flavours," retrieved 2-19-2006, from http://www.lloydstsbjobs.com/flavours.asp Lloyds TSB Commercial Finance, retrieved 2-19-2006, from http://www.lloydstsb-commercialfinance.co.uk. Randall, Jon (2004). Total Rewards - "Creating Value through People," Watson Wyatt, retrieved 2-19-2006, from http://www.watsonwyatt.com/asia-pacific/pubs/hrinsights/showarticle.aspArticleID=13542&Component=Executive%2BCompensation. Rieger, T., and de Koning, G.M.J. (2003). "Roadblocks to Customer Engagement," retrieved 2-29-2006, from http://gmj.gallup.com/content/default.aspci=9838. Rodrigues, Ann (2001). "CRM Within Financial Services: Promise vs Reality", Hoggett Bowers, retrieved 2-19-2006, from http://www.hoggett-bowers.com/item.asptxtID=1823. Read More