EurWORK European Observatory of Working Life

Vodafone Omnitel, Italy: Make work pay – make work attractive

About

Country: 
Italy
Organisation Size: 
Large
Sectors: 
Post and telecommunications
Category: 
Making work pay

In July 2004, the Vodafone Group introduced a new share scheme, called Allshares. The Vodafone Group distributes shares free of charge to all full-time staff, including the approximately 10,000 employees who work for Vodafone Italia. In this way, Vodafone rewards its entire staff for their contribution to the Company's future and gives everyone, regardless of their role or status within the organisation, a chance to play a part in its success.

Organisational background

Vodafone Group Plc is a British mobile phone operator with headquarters in Newbury, England, and employs a total of 60,000 workers. It is the largest mobile telecommunications network company in the world in terms of gross income, with equity interests in 26 countries and partner networks (networks in which it has no equity stake) in an additional 33 countries. In Italy, the subsidiary company, Vodafone Omnitel NV, has a workforce of almost 9,500 employees; the average age is 32 and 75% of the employees are women. The workplace union structure, RSU (Rappresentanza Sindacale Unitaria), is composed of about 100 representatives of whom 50% are women. The union density, however, is only about 15% to 25%, as Vodafone is a relatively young company. The management and the employee representatives meet on a national or territorial level, whenever requested by one of the parties. Vodafone Italia (former Omnitel Pronto-Italia) is the second-largest mobile operator in the group in number of subscribers. Vodafone Italia has about 24 million clients in over 2,000 sales offices in Italy. The GSM network covers over 97% of Italy, representing 99.4% of the population. The main local competitors are TIM, Wind and 3. The company is a member of the employer association, Asstel, affiliated to Confindustria.

Description of the initiative

In July 2004, the Allshares programme was implemented for the first time. It was initiated by the ‘Compensation and Benefits Group’ of the Vodafone Group Plc.

The Compensation and Benefits Group, as part of the Human Resources Group, has the task of providing a number of services, such as pensions, basic salary (locally determined and reviewed annually), life insurance, holidays, company sick pay, company maternity pay and share schemes.

In July 2004, all employees who had an open-ended contract on 1 April 2004 received a bonus of 350 shares. The shares were given to each employee, regardless of their role or status within the organisation. The awards are not subject to performance conditions. After July 2006, each employee could decide whether or not to sell the shares.

In July 2005, all employees with an open-ended contract received an award of 320 shares. Also in this case, the shares lapse after two years and thus from July 2007, each employee can decide whether or not to sell the shares.

This financial reward, in addition to the standard salary agreements, is considered an opportunity for each employee to share in Vodafone’s growth and success.

Throughout a personal monitoring system, each employee can follow the trend and the value of the shares. The monitoring occurs on a specific internet site, to which each employee has a personal access code. As an alternative, all employees of Vodafone Italia have received a checking account, free of charge, at the bank ‘Banca Intesa’, through which they can check and track the value of the shares.

Besides the Allshares programme, Vodafone has two more share schemes for its employees:

  1. Shares you can save for: Sharesave. Under this scheme, an employee can save for three or five years, using a Save-As-You-Earn account to buy shares in the Vodafone Group. At the end of this time, the employee can decide to either use the savings to buy the shares, or to carry on saving. The price of the Vodafone shares is set when the worker takes out the contract. According to this share scheme, the employee can save up to £250 per month. 
  2. Shares you can buy: Share Incentive Plan. This allows the employee to become a Vodafone shareholder with immediate effect. The worker can buy shares, free of income tax, via a payroll deduction, and for every share bought the company provides a matching share for free. The matching shares need to be held in the plan for at least three years. According to this save scheme, the employee can contribute up to 5% of the pre-tax salary, or £125 per month.

In addition, in December 2004, the management and main sectoral trades unions at Vodafone Omnitel in Italy signed two agreements with a focus on improving the work–life balance of the company’s 10,000 employees. The provisions of the two agreements include measures to help working mothers, a new organisation of working time, increased pay bonus for Sunday and night work, and the rules for performance-related pay over the period 2004–2008. The signatory unions were Slc-Cgil, Fistel-Cisl and Uilcom-Uil.

The objective of the first agreement was to identify work models that could improve the balance between work and private life.

In line with the bargaining model, determined by the national tripartite agreement of 23 July 1993, the second Vodafone agreement defines the rules of performance-related pay from 2004 to 2008. Payments will be directly linked to increases in profitability and service quality (to be measured by external bodies), with the aim of achieving, through greater worker involvement, the company’s objective of overall improvement. According to the company, the performance-related payment is ‘a very important bonus, equal to about two months remuneration, and underlines the company’s confidence that the success of previous years will be confirmed and strengthened, thanks to the involvement of all Vodafone workers’.

Analysis

The Allshares programme is a stock incentive plan, in which the Vodafone Group distributes shares free of charge to its 60,000 employees around the world. In this way, Vodafone rewards its entire staff for their contribution to the Company’s future and gives everyone, regardless of their role, status or seniority within the organisation, the chance to take part in its success.

All employees, including the approximately 10,000 staff that work for Vodafone Italia, received a letter from the Vodafone Group X Chief Executive Officer (Arun Sarin) confirming their allotment of shares. This letter, which contained various instructions, was translated into Italian by the management of Vodafone Italia for the Italian employees.

The Allshares programme was introduced on a unilateral basis by the management of the Vodafone Group, with the idea of letting its employees participate in the success of the company. Until now, there have been no difficulties linked with the policy. Trades unions accepted the introduction of a financial reward since it represents an additional benefit, not dependent on performance conditions, to existing salary arrangements.

Regarding the performance-related pay, it is clear that the innovative agreements proved that high-profile industrial relations between a company and trades unions produce high-level results.

Exemplary and contextual factors

The Allshares programme is a global employee share plan, which gives all employees the opportunity to receive a number of free Vodafone shares at a pre-determined date in the future. As the value of the shares represents a benefit added to the pre-existing salary arrangements and performance-related pay, it makes working more attractive. Furthermore, each employee is able to track the value of their shares via the internet or the bank.  

Maite Tapia, Volker Telljohan, Fondazione Istituto per il Lavoro, Bologna

Useful? Interesting? Tell us what you think. Hide comments

Add new comment