Paying National Living Wage makes business sense-Brewdog

Brewdog announced turnover of £70 million in December 2016
06/09/2017 - 07:00
With the increase in the National Living Wage putting a strain on the already tight purse strings of hospitality sector businesses, fair pay trailblazer Brewdog explains just how beneficial operating the scheme can be to a workforce.

Recent news that global drinks company and Scotch Whisky producer Diageo had become the 900th employer in Scotland, and the 33rd member of the FTSE 100, to achieve Living Wage accreditation came at the same time as a poll showed strong employee support for the scheme.

Eight out of ten Scots said that being payed a Living Wage would make them feel more valued by their employer and seven out of ten (71%) said that being paid a Living Wage would make them feel their employer was investing in their development.

Paying the Living Wage is something which rags-to riches Aberdeenshire Brewing firm Brewdog have been doing as far back as October 2014.

“BrewDog has always had a focus on providing exceptional customer service," says the company's head of people, Fiona Hunter. "Low pay, particularly in the hospitality sector, is something that doesn't sit well with us. 

“Paying a good wage makes absolute business sense. We cannot expect our employees to come to work and be amazing when they are worried about making ends meet.

“Providing a good standard of living is the right thing to do, and it has the added benefit of helping our employees be as brilliant as possible, which drives the growth of the business. 

“The decision to pay the Living Wage was made as part of a conscious decision to do the right thing for our employees. It was all about better rewarding and engaging our staff."

The process of gaining official accreditation took around three months for the company who restructured company pay, abolished zero hour contracts and introduced a system of guaranteed hours.

Two-thirds of BrewDog's staff were affected by the Living Wage initiative, and the company's wage bill increase was significant, at £500,000 in the first year.

But the company says that its results were rapid and “extremely positive” shown by a 50 per cent increase in staff satisfaction with pay and, a year down the line, a 40 per cent turnover in staff at BrewDog's retail sites. In one bar, annual staff turnover fell from 240 per cent to 60 per cent.

Chris Queen, general manager of the company's DogHouse bar in Merchant City, Glasgow has worked for 20 years in hospitality and is celebrating one year with BrewDog. He sees the benefits of both working for a Living Wage accredited firm, and running a Living Wage accredited business within that. "BrewDog is hands down the best employer I've worked with," he says.

"Staff turnover is much lower compared to other hospitality companies. My staff feel valued and they are much more engaged. I think if you treat people with respect you get respect back."

Results from the Poverty Alliance’s survey of over one thousand 18 to 64 year-olds suggested that products and services from companies adopting the scheme were also more attractive to customers.

Three out of four Scots said they would think more highly of a company which became accredited for paying the real Living Wage, while four out of ten people north of the border care if products and services they buy are from a Living Wage employer.

Paying someone on a minimum wage a Living Wage equates to a pay rise of £2000 a year, according to The Poverty Alliance, which promotes the real Living Wage in Scotland.

Poverty Alliance director Peter Kelly said: "More and more employers in Scotland are seeing the benefits of paying a real Living Wage, in terms of increased retention and better staff morale.

“Right now there are more employers in Scotland who are signing up to become Living Wage accredited employers than in any other region in the UK. Accreditation is a voluntary programme and a very simple process which we urge employers of all size to consider."

Since its launch in April 2014, the Scottish Government-funded accreditation programme has seen over 25,000 people in Scotland receive a pay rise as a result of the initiative.

The UK Living Wage outside of London is currently £8.45 per hour, compared to the mandatory ‘National’ Living Wage of £7.50 an hour for over 25s.

“Allow yourself plenty of time,” advises Brewdog’s Hunter. “Don't just look at how it's going to affect you for the first year; look five years into the future.

“Combine it with an overall look at how you're treating your staff. It can't be a band aid, if you've got deeper staff engagement problems or deeper dissatisfaction issues it's highly likely that you've got other things going on as well.

“The impact of doing something will be lessened if you don't. Fix those at the same time."

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