As the political debate about stakeholding hots up, this fast growing company, still new to the community affairs scene, offers a model for the inclusive, partnership-based, company of tomorrow
p>With the new millennium fast approaching, futurologists are busy predicting what the world of work will look like. The buzz words are already familiar: outsourcing and downsizing, empowerment and involvement, the information technology revolution, and, yes, stakeholding. The RSA Tomorrow’s Company Inquiry addressed these issues and the F.I. GROUP, in many ways a model tomorrow’s company, was among the study sponsors.
Features of tomorrow
FI’s core business is outsourced IT business applications management, through long term partnership contracts with firms like Tesco, Barclays and BT. Although founded in 1962, recent growth has been rapid – turnover trebling in the last five years; in the first half of this year it was up by a third. Such long term trusting relationships, with an absolute focus on customer needs, are the essence of partnership sourcing, now promoted vigorously by the CBI among others as more productive than the old confrontation with suppliers.
Another distinctive feature of FI is the flexible nature of staff engagement. Some 1,700 people are part of FI, but only half are permanent employees with ‘associate suppliers’ making up the balance on varying contractual terms. The nature of the work means staff are based in clients’ own facilities as well as in FI’s centres. Recently the company introduced two changes in employment: flexible contracts with variable hours and a flexible benefits package allowing wider and individual choice within a total cost limit. In 1994 it achieved Investor in People status.
A third feature is that staff are not just stakeholders, a rather a notional concept in some firms, but shareholders too. A successful work-force buy-out took place in 1991 and by October 1995 the workers controlled 54% of the equity through a combination of individual holdings, a Shareholders Trust and a new QUEST (qualifying employee share ownership trust) which distributes shares to employees mainly through profit-sharing. The belief is that significant workforce ownership is a strong motivator to improve performance and this will continue even if the flotation on the London Stock Exchange, currently under active consideration, goes ahead.
The stated rationale of why community affairs is important will be readily understood in other companies – that the business cannot be divorced from the world around and that its own plans for growth rely on a thriving economy and a sustainable society. A community investment programme can keep it abreast of issues, help it to understand motivations and develop networks and links in society.
FI has been a member of the Per Cent Club since 1992, but until recently lacked an organised strategy; earlier unstructured activity was driven largely by personal motivation. Now programmes are thematically focused on the needs of young unemployed homeless people and of education, with a preference for projects which help individuals to lead successful working lives particularly through the medium of information technology.
At the 1994 AGM, staff approved this policy, drawn up after a six month study of practice in other companies and of community needs, and set a target for community programmes at one per cent of pre-tax profit. As this is money that would otherwise be available for higher dividends and hence distribution, this is one indication that, contrary to fears sometimes expressed in companies, staff can be supportive. In addition, the staff Shareholders’ Trust provides matched funding to staff efforts from its own residual dividend income (and has done so since established in 1991).
In 1995 pre-tax profits were ?3.3 million and total community contribution was valued at ?47,540, equivalent to 1.5%. With that sort of budget, a conventional donations programme can have only limited impact. So the first objective of the new policy is encouraging staff, employees and associates alike, to become involved themselves and to seek development opportunities in volunteering.
Instead the first call on the limited resources is for the costs of a full-time community affairs manager. This ratio of one dedicated community staff member to 1,700 staff is far in excess of what the longer established ‘big names’ enjoy. For example, the same ratio in BT, still Britain’s largest community contributor, would yield some 100 full-time community relations staff – and twice that if only permanent employees are counted.
The obvious question is whether this emphasis on employee involvement, the intensive input of full-time resources and the greater staff commitment from actual ownership has led to high rates of participation and better quality programmes than those achieved by others. Such evidence would help make the case generally in companies for better community affairs resourcing. Unfortunately it is too early to say, as the community affairs manager only came in post and began promulgating the new policy in mid 1995.
The programme is due for formal review after two years and that would be a good time for FI to publish a frank account of its experience. Is the intense input approach effective? Is it only needed at the outset to embed the programme?
FI recognises that a deliberate approach to evaluation is as much needed in community relations as in the rest of the business. One critical area for analysis is the impact of the programme on attitudes among staff. External attitudes could be less important, as customers are not the general public on the high street but other businesses. However even here a reputation as a ‘good business’ in all facets can be important before clients decide to enter a long term partnership.
Chosing community partners
Starting the new formal policy from scratch has allowed FI to build tight selection criteria before entering a relationship with a community partner or programme. This deliberative process includes a set of questions:
is it in line with the community policy?
does the voluntary organisation have a strategy that FI can support?
will the organisation survive, as FI seeks a long term partnership?
is the location accessible for FI staff?
is there a cultural fit in terms of attitude and approach to partnership, sharing expertise and experience?
can the organisation afford the time to liaise with FI to ensure that the needs and support are matched effectively?
Among the programmes already subjected to this process and now entered into are:
Foyer Federation for Youth, where two consultants helped to plan an information strategy and ran a workshop for the Federation and individual foyers;
software donations, for example to HARP, a Birmingham-based charity helping homeless people with alcohol-related problems, with graduate trainees developing a piece of software to manage its external contacts; this is being tested and may be offered to other charities with similar needs;
a mentoring scheme in Leeds, set up by the local TEC, to partner business mentors with 14 and 15 year olds from inner city schools;
teacher placements from six schools in the Solihull area to undertake feasibility studies on how FI could accommodate work experience opportunities for school children, given the nature of the work.
One challenge lies in the nature of outsourcing itself. Where do ‘outsourced’ workers feel they belong – with their ultimate employer or with the client company along side whose employees they work day-today? If corporate community involvement is partly about sharing values with staff, an inclusive approach is needed here too, especially when the client company has its own activity involvement programme.
FI’s experience shows that even a smaller firm with a limited budget can undertake activities similar to those of longer established companies. It can now do the whole community involvement sector a service by allowing scrutiny of the success or otherwise of its community programme. As a good approximation of tomorrow’s inclusive stakeholder approach, can it do more and better, or is the future of community involvement doomed to remain the uphill battle it sometimes seems today in less obviously modern companies?
F.I. GROUP plc
Year ended 30 April 1995
Chairman: Sir Peter Thompson
Chief Executive: Hilary Cropper
Main Business: managed information technology services, training and recruitment
Turnover: ?61.7 million
Profit before tax: ?3.3 million
Employees: 609 plus similar number of associates
FT UK Top 500 ranking: not listed
Charitable donations: ?9,365
Total community contribution: ?47,540
% of pre-tax profit: 0.3% (charitable); 1.5% total contribution
Memberships: BITC, Per Cent Club
Community affairs manager: Marion Clyde
Address: Campus 300, Maylands Avenue, Hemel Hempstead, Hertfordshire HP2 7TQ
Phone: 01442 233339 (fax: 01442 238446)
Corporate Citizenship Briefing, issue no: 26 – February, 1996