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Happy employees equal happy days for Personal Group

Employee engagement and benefits schemes are the ‘secret sauce’ that makes a business different
Hapi app
Personal's employee benefits now available on an app

Retaining staff especially the good ones is a headache for businesses everywhere.

Mark Scanlon, Personal Group PLC’s (LON:PGH) chief executive, reckons an all-encompassing benefits package is one way to ensure employees stay put.

WATCH: Personal Group now set for growth after new digital push

As Personal runs schemes at some of the UK’s largest employers, already he’s clearly not an objective party but he quotes some compelling statistics nonetheless.

What staff want and expect now runs far beyond the mandatory pension provision, season ticket loan and luncheon vouchers, he told Proactive, but get it right and it works.

Personal undertook research with ten of the UK’s top chief executives from which emerged five clear themes, he says, but more importantly the responses indicated a clear correlation between looking after staff and having a better business all round.

While this may be just as simple as saying thank you, Scanlon believes employee engagement and benefits schemes are the ‘secret sauce’ that makes a business different.

A US survey that found a group of businesses that actively followed this strategy had a share price 185% above peer group, he adds.

All under one roof

Personal’s pitch is that it makes it easier to offer more of these services to employees in one place from one provider.

DHL, Royal Mail, Two Sisters, Network Rail and the NHS are among major companies that offer their employees benefits provided by Personal, while it has just started to offer a bundle of services to small and medium-sized companies (SMEs) through a tie-up with accountancy software group Sage PLC.

READ: Personal Group says benefits at work now stable after tax changes

At the core of the business is a long-established insurance business that provides hospitalisation cash payments, death in service and convalescence cover.

Set up in 1984, the insurance arm produces stable, recurring income. For example, in the latest six months, it chipped in £15.3mln or 78% of the group revenue total.

Underlying sales performance remained strong, while the claims ratio of 24.4% was up slightly but still very profitable for Personal.

Growth is the issue here, but Personal says a shift to putting all of its products onto an app is addressing this.

Indeed, digital is the way forward now in all areas for Personal.

In addition to insurance, its runs a salary sacrifice scheme, Let’s Connect, where staff can buy IT products, through monthly payments deducted directly from their salary.

This means a national insurance saving (as the salary is lower) for the employee while they can also have the product immediately.

More Apples than John Lewis

“We shipped more Apple products than John Lewis at Christmas 2015,” Scanlon quips.

A new mobile platform, Hapi, also means that everything Personal provides is now available on an employee’s phone.

For, say, a lorry driver working for DHL, it is very convenient.

As with its insurance business, Personal is migrating all of its Let’s Connect business onto Hapi, a pay-as–you-go SaaS product.

In its latest half year to June, Hapi’s revenue rose by 28% to £949,000 and it was the one area that grew strongly, though the Sage SME venture is still in its formative stages.

Eventually, revenues from the platform may match those generated from insurance, says Scanlon.

Personal has over 8,000 offers on its platform and the discounts on offer can add  over £1,000 annually for the most assiduous users especially discounts on large ticket items such as booking a holiday.

The Hapi app clocks what you save in a corner. Personal says the top ten retailers account for 90% total spend by customer.

New innovations such as fair value loans (for debt consolidation purposes) take advantage of the fact that, like all of the offers, payments are deducted at source, meaning less risk of default so the rates of interest are a fraction of payday loans.

These savings and products reflect well on the employer says Scanlon and encourage staff to stay.

Fourth quarter most significant

The tech giants such as Apple and Samsung tend to release new products in the fourth quarter of the trading year and because of the IT-dominated Let’s Connect business, this is also Personal’s most important trading period.

Broker Cenkos expects underlying profit (EBITDA] of £10.7mln this trading year, with £7mln in the second half compared to £3.7mln in the first six months.

At 394p, the prospective yield is 5.8% on the 22.7p full year dividend payment forecast by Cenkos.

The broker adds that when £8.7m of net cash and £6.1m of realisable financial assets are factored in, the earnings rating is a cheap-looking 13 times.

If Hapi does provide the growth Scanlon expects, it might not stay that cheap-looking for long.

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