Workplace

Employment Issues

Key Statistics	2003	2004	2005	2006
% growth in jobs	10%*	23%*	13.3% *	3.3%*
% of women in managerial and executive positions	52%*	57%*	54%*	53%*
% of female staff	66%	66%	61%	61%
% of managerial grade employees from ethnic minorities	1.6%	2.2%	2.3%	2.4%
% of workforce from ethnic minorities	2.0%	1.8%	1.9%	2.00%
% of staff disabled	4.0%	4.0%	4.0%	2.00%
% of staff turnover			16.9%	12.7%
% of staff on temporary contracts			1.9%	1.7%
Staff Headcount	4225	5151	5836	6026
* net figure including impact of branch closures

Strategy

The workforce is seen as fundamental to the continued success of the company, with staff figures following the trend of business growth.

Employee Contribution

All Company employees are regarded as partners in the business and we recognise the distinctive contribution that each person makes to the success of the business. All employee objectives are linked to the organisations Key Business Goals, which enables the Company to achieve its strategic vision. The Company endeavours to engineer a collective vision through all areas of employee life. At induction the collective vision and the employee's role in achieving this is illustrated. The key role employees play is carried through an internal communication, which regularly provides updates on performance and achievement of Company strategies.

Northern Rock is fully committed to providing a working environment that is of benefit to both the organisation and employees alike. Vigilance is maintained in ensuring that the Company works within the legislative and regulatory framework relating to its business policies and procedures which are continually monitored to ensure that staff are treated fairly.

Recruitment People Strategy

The Company's People Strategy has been devised to ensure that business operations are fully supported by recruiting, training and developing quality staff.

The Company's "People Plan" which delivers the strategy, has been devised to ensure that business operations are fully supported by recruiting quality staff, by developing innovative recruitment channels to ensure access for all sectors of the community and ensure diversity within our workforce. The plan also addresses retention issues, training, education and development.

Communicating Northern Rock's policies and practices to staff is also very important. The "People Plan" developments are actively communicated through internal magazines, PowerPoint presentations, Intranet and e-mail that are cascaded to staff at every level throughout the Company.

With the aim of attracting quality staff, Northern Rock's website has recently been reviewed and improvements made to ensure that information is as accessible and informative as possible.

To assist the retention of staff and the development of our “Grow Our Own” strategy Northern Rock has a Job Shop and Building Skills shop at the Gosforth Office. With the motto of “ Your skills. Our success. Your future ” the objective of these facilities is to provide opportunities to find out about jobs and opportunities as well as how staff can develop their skills to prepare for their future career.

Equality, Diversity and Community Issues

As an organisation Northern Rock continues to be committed to ensuring that equality exists across all aspects of working life.

In addition, the Company encourages diversity throughout our workforce, in the knowledge this will give Northern Rock a competitive edge in meeting the demands of its broad customer base. To support this, a framework has been developed to support Northern Rock's policies and ensure good practices prevail within the organisation.

The Company is continually seeking ways to improve its policy and practice by updating its skills and networking with relevant groups for advice and guidance.

Northern Rock's ongoing training and management development programmes ensure that equality and diversity issues and its responsibilities under legislation are met. Through seminars and workshops Northern Rock has raised the profile of equality and diversity to enable its staff to develop good practice in all aspects of dealing with people.

Opportunities

Northern Rock continually reviews its policies and procedures to ensure that staff are offered every opportunity to develop their role and personal development within the company. The Training Skills Shop and Job Shop provide resources to ensure career development and internal movement.

Equality

Disability

Northern Rock has found positive benefits in working with various organisations that support the rehabilitation of disabled people. Continuous good practice as a Disability Symbol Holder , and strong links with community partnerships, has helped us increase the number of disabled employees.

Gender Equality

Northern Rock is a member of Opportunity Now , an organisation which looks at ways to improve gender equality in the workplace. Each year the Company undertakes a bench marking exercise which enables us to measure ourselves against other organisations. This ensures that Northern Rock does not lose sight of Company goals and identifies key trends and examples of best practice towards gender equality and gender diversity.

Over 54% of staff in Senior Management positions are female. This figure has increased year on year and shows an increase of over 50% in comparison to 1997. Over 61% of the workforce are female some of whom benefit from flexible working hours which allow them to still play a major role in bringing up their families. The following graph shows how Northern Rock has achieved a balanced workforce throughout the different grading structure.

Equal Pay

Following an equal pay audit to ensure equality in our pay systems, a job assessment review was carried out which resulted in a robust pay system. Northern Rock works with Opportunity Now and the Equal Opportunities Commission to keep this area as a constant focus.

Racial Equality

In 2002 Northern Rock joined Race for Opportunity, a national business network of over 180 UK organisations responsible for more than two million of the UK workforce, working on race and diversity as a business agenda. Race for Opportunity gives us the opportunity to benchmark against other organisations to identify gaps and weaknesses and supports the Company in developing and improving ethnicity in its workforce . Northern Rock is also a member of Opportunity Now which is the only membership organisation representing employers who want to transform the workplace by ensuring inclusiveness for women. They help companies to build and communicate the business case for this, to share and inspire best practice and to give employers and their people the tools to drive change .

Diversity

Direct links have been established with several recruitment agencies and central employment services to provide a more diverse workforce, in particular “At Work” which is an agency that works to attract BME (Black, Minority, Ethnic) staff and lone parents.

Age Positive

With the acknowledgement of an ageing society and introduction of age discrimination legislation, Northern Rock is committed to encouraging applicants from all parts of society and in all age groups.

In 2004 Northern Rock launched an age diversity campaign to encourage more applicants over the age of 50 years.

Northern Rock was again awarded the Age Positive Champion status in 2006 and has been selected as an Employer Champion. This provides government recognition for Northern Rock's exemplary approach in establishing best practice relating to age.

As part of the organisation's ongoing development there is an Age Positive Group that meets regularly to discuss issues and continue our pro-active approach. Part of the work of the group is to review policy and procedure, providing staff with an opportunity to shape the working environment for the future.

Age Discrimination

The above regulations came into effect on 1 st October, 2006 with the aim of eliminating discrimination in employment on the grounds of age.

For many years Northern Rock has voluntarily applied the principles of this legislation and therefore the Company has been required to make very few changes to our current practices in order to comply.

One key area which we have changed is that of retirement date. Previously, staff retired at 60 but had the option in some circumstances to be able to work for longer subject to the agreement of their Manager and a variation in their terms and conditions of employment. However, with effect from 1st October 2006, the retirement age increased to 65 and any retirement before that age will be voluntary. Further details are set out in the Company's Retirement Policy.

Staff who are already 60 or over have been contacted separately by our Personnel Department with precise details of how these changes will affect them.

Northern Rock is speaking to AMICUS about the affect of this legislation on the Job Security Agreement.

Work-Life Balance

As a supportive employer the Company has a range of Family Friendly Policies including:

Career Breaks
JobShare
Condensed Working Days / Weeks,
Study Leave
Flexible Working Hours
and many more.

Flexible Working

In November 2005 Personnel issued guidelines about the need for all non-Head Office staff to be given more flexibility in their working patterns. This new policy recognised the fact that non-Head Office staff are unable to operate a formal flexi-time system such as that enjoyed by Head Office Staff.

A further communication was re-issued in March 2006 to reinforce the Management's desire that this should work well for all staff.

At this point we also agreed that a survey would be conducted jointly by AMICUS and Northern Rock to review:

to what extent the guidelines had been implemented
to assess whether there are any barriers to staff being able to benefit from the policy
whether any changes needed to be made to the guidelines
whether the current system is better or worse than that previously provided.

This survey was circulated in September 2006 and the responses are currently being analysed.

Sickness Management

Work on managing absence has continued during 2006.

A dedicated Absence Team now manages all aspects of sickness. The centralised process has reduced the overlap and duplication of administation and enables one area to identify specific issues.

Our internal management course "Leading a Team" incorporates a detailed section on sickness management and this will be delivered to all existing team leaders. The Absence Management course within the Management Development Programme delivers concise information to managers graded M3 - M7 regarding sickness procedures and advice on how to deal with all types of absence.

The launch of the Occupational Health Service in October 2005 continues to provide a service for all managers to receive medical feedback regarding underlying issues with staff members. This feedback contributes to the ongoing management of staff and enables the company to provide support where appropriate – see details of the scheme later.

In addition, the Employee Assistance Programme (EAP) which was launched in December 2005 offers free, confidential counselling and advice for all staff. This service is communicated to all staff through various routes such as the Occupational Health Nurse, letters, posters, information leaflets and return to work interviews. Management discretion can also be used to make referrals to the EAP, where appropriate.

The Absence Team liaise closely with the Diversity Manager to ensure that staff with disabilities highlighted through sickness absence and/or referral processes, are identified as soon as possible to ensure appropriate intervention.

The Absence Team produces a monthly report highlighting staff with 4 or more periods of absence within the last 4 calendar months. This report is forwarded to Operational Directors for investigation within the line. The report acts as a trigger point for appropriate action. Personnel receive feedback on any action taken.

Sickness reporting procedures have been reviewed and communicated within the line. This update included an updated Electronic Sickness Form and Return to Work Interview Sheet with Managers Guide. There will also be an Employee Declaration requiring confirmation that the staff member followed the correct absence procedures. This will ensure that the paperwork used for sickness absence is consistent across the company. The sickness policy has been reviewed and agreed with AMICUS and posted on the Intranet.

Please see further information in Health and Safety Section

Employee Support Groups

In 2002 an Equality and Diversity Panel was established to help minimise any barriers between employees, enhance understanding and to help shape policy and practice. As the staffing levels have increased so has group membership. In 2004 the panel split to form smaller focus groups to ensure all needs were being met:

The groups have board backing and consist of volunteers who are directly affected or interested in the following:

Age Positive
Disability Hearing - aim of which is to make communication accessible with D/ deaf/ hard of hearing employees.
Disability Visual - addressing real issues for visually impaired staff.
Disability Physical and Cognitive Support - reviewing disability and health issues affecting staff.
Race and Ethnicity - understanding different racial and cultural backgrounds.
Religion and Beliefs – (including people with no faith).
Sexual Orientation.
Work Life Balance
Race and Ethnicity.

They all operate under the brand of 'Make Me Matter', and will help Northern Rock to continuously develop.

One key achievement for the group was establishing a Contemplation Room on site which members of staff can use to pray or reflect.

Community Issues

Northern Rock is committed to a diverse workforce that reflects the local community and continually strives to improve accessibility to its recruitment and selection process in light of demographic changes.

Work has also been carried out with Refugee Groups in preparing them for the workplace through training and placements. This has been supported through The Northern Rock Foundation and helps Refugees to return to paid employment.

Northern Rock continues to participate in an initiative called 'Common Purpose'. The purpose of this is to help people in leadership and decision making positions to be more effective: in their own organisations, in the community and in society as a whole.

Participants have the opportunity to take part in specialised programmes, which brings together leaders from all sections of society, to tackle issues with the people who carry real life responsibilities with them. This approach doubles the return on investment resulting in better leaders and stronger communities by developing links with other organisations.

A number of initiatives have been introduced, some of which target school pupils and college students.

Formal Contacts with various Educational Business Partnerships, such as projects helping primary school children with a design task and providing interview skills practice for years 11 to 13.
The Company is a member of an Employer Forum, organised by Newcastle College , which meets half yearly.
Informal partnerships with colleges of secondary and further education, including work experience which remains one of the major ways the company can help. Requests have also been received from many of the local schools requesting talks on how to prepare for university entrance and an HR overview, for those taking this module as part of their studies.

AMICUS

AMICUS is recognised as the representative and negotiating body on behalf of graded staff on matters relating to salaries, hours of work, holidays etc. Many members of staff are also union representatives and receive full backing from the Company to attend training courses etc. The input received from employees, managers and trade union representatives is recognised as vital in helping professionals employed in the Personnel function to monitor and implement organisational practices.

Trade Union membership is estimated at circa 50% of graded staff, however these figures are not collated by Northern Rock as membership is considered private to the individual.

During 2006 AMICUS staff, including staff representatives, continued to hold open days within Head Office at Gosforth and Sunderland sites.

Strengthening the partnership approach that Northern Rock and AMICUS takes to industrial relations, the first full-time union representative in Northern Rock was appointed by AMICUS in May 2005. Based in Head Office site at Gosforth, the representative is the main point of contact for AMICUS members in Northern Rock and is available to:

Be a source of information on union membership and benefits
Provide a vehicle for feedback to and from members on any industrial relations issues on-going in the Company, liaising with the network of local workplace representatives
Assist individual members with problems at work

The maintenance of good staff relations is very important and the Company will try to ensure that all employees are treated fairly. To this end a grievance procedure and disciplinary procedure are in place, both of which have been agreed with the union. All staff have access to the policies and have the right to union representation at all stages.

In agreement with AMICUS a Conduct at Work Policy was introduced in 2004 and issued to all existing staff. New staff receive a copy on commencement of employment. The policy outlines how staff should behave and encourages employees to treat each other with respect and dignity.

Staff Concessions

Maternity Policy - Northern Rock operates an extensive maternity policy, which goes beyond minimum requirements, including paternity arrangements and paid time off to attend antenatal appointments.
Career Break - As an equal opportunities employer, Northern Rock operates a career break policy for staff who wish to leave for a maximum of 5 years due to genuine domestic reasons e.g. maternity or adoption leave, care of relatives or relevant full time education courses.
Alternatively,
Parental Leave - staff can take time off to care for dependants in the instance that a dependant falls ill, or there is an unexpected termination or disruption for the care of a dependant, or for an incident which involves a child of an employee whilst in the care of an education body.
Staff travel - Northern Rock operates a number of schemes whereby funds are available for staff to purchase a season ticket which offers a good discount on travel passes. Staff pay for the ticket via payroll deductions, normally spread over a number of months.
Staff discounts - a list of discounts that staff can benefit from are available on the 'Pink' communication site on the Intranet.

Permanent Health Insurance Plan

This benefit is available to active members of the Company Pension Scheme. The Company provides permanent health insurance benefit through Scottish Equitable. The policy provides a payment of up to 75% of basic salary less the Statutory Sickness Benefit which may be payable by the DSS.

Entitlement to benefit is not an automatic right and is subject to objective medical evidence.

Employee Assistance Programme

Northern Rock was delighted to announce in 2005 the introduction of a brand new benefit for all Northern Rock staff AND all members of their household. With effect from 1st December 2005 Northern Rock introduced an Employee Assistance Programme designed to provide free professional help and support for our employees and their families in times of need.

The service is available 24 hours a day, 365 days a year and all advice, help and support is given in complete confidence. Expert counsellors and advisers are always available to assist with a wide range of issues including:

Information and help with regard to illnesses, treatments and medications:

Specialist Clinic advice on Pills and Prescriptions
Travel Clinic
Healthy Living Clinic
Men's Health Clinic
Women's Health Clinic

Specially trained counsellors in:

Marital and relationship difficulties
Emotional problems
Anxiety and depression
Bullying and harassment
Pressures at work
Medical matters
Financial worries
Housing problems
Legal concerns

Family Care:

Childcare, maternity and young people's health
Eldercare and older people's health

Assistance can involve referral to a qualified counsellor for face to face counselling if this is needed. All of this help is available to our staff and their family members via a freephone number.

Utilisation is currently running at around 1% which is a little lower than we would have hoped for but not particularly unusual for a relatively new scheme. Recent figures show a wide range of services are being utilised.

During 2007 we intend to further promote the scheme to increase utilisation.

Human rights awareness - outsourced functions

see also Business Ethics and Human Rights.

Our Head Office Security Staff employed by St. James Security receive a human rights awareness briefing as part of their training.

Security Industry Licensing

On 20 March, 2006 it became illegal to work as a contracted-in-security guard without a Security Industry Association (SIA) licence. It also became illegal for service providers to deploy unlicenced personnel. Ahead of this deadline, all of the security guards working on our sites obtained their SIA licences. In addition, our head office security guarding company was one of the first to be awarded Approved Contractor Status from the SIA.

Security Training

In addition to obtaining their SIA licences (see above), security staff working on our head office site received training during the year on fire management, data protection and CCTV and first aid.

A specific security training exercise was also carried out at the head office in July 2006.

CCTV

At Head Office we have invested heavily in security in the construction of a dedicated security control room employing the latest CCTV monitoring technology linked to graphical maps of the site for ease of reference. A further 60 internal and 3 external cameras have been added for the safety of our staff and visitors. Northern Rock complies with Data Protection Legislation in regard to the use of CCTV cameras and film.

Raids and Robberies

During 2006, we continued to monitor and review our existing security systems and procedures in the branch network. Our investment in these security systems continues to be effective and our excellent security record supports this. Whilst raids and robberies continue to take place in our sector, we achieved zero incident level during the year. To ensure there is no complacency, we created in 2006 a dedicated Security Group meeting on a bi-monthly basis. The group acts as a Steering Group providing a central point of management focus and leadership for security related matters. The group continually reviews and maintains the company's policies and procedures for physical, personal and information security arrangements to reflect current practice and guidance. The group also reviews security incidents, threats and trends to identify improvements to existing arrangements as required

Branch Re-Branding

We have decided to invest heavily in our branch network to improve the quality of our customer journey, the standard of facilities we are able to offer and the range of products available. A model branch was designed and constructed taking into account feedback from various parts of the business whilst introducing a new brand and image.

The model branch has been subjected to extensive ergonomic testing to ensure that the physical design of the component elements are ergonomically suitable for their purpose.

The model has also undergone extensive user testing with a cross section of our branch staff. Their knowledge and relationships with our customers has been instrumental in ensuring that the design reflects the needs and desires of our customer base.

The model branch is currently in the final stages of review and will be rolled out across our branch network over the coming years.

Contractor Control

During 2006 we opened a dedicated Contractor Reception office at our head office. This facility will enable us to manage more effectively all contractors arriving on site to work in our head office complex. We have also invested in specialist software that will provide on-line training and induction material to all contractors to ensure they are fully briefed and informed of our health and safety policy and site rules and procedures. This new technology will allow us to track the progress of a contractor induction and to monitor their registration and work whenever on site.

Asbestos Removal

During 2006 we have continued to follow the principles of our Asbestos Management Plan. The plan already identifies any asbestos presence within the construction of our properties. Any such asbestos is suitably protected and is regularly surveyed to monitor its condition. Prior to the refurbishment of a property we try wherever practical to undertake works to remove the asbestos completely and as such we are continuing to reduce its presence in the portfolio. Any newly acquired property is surveyed for asbestos and if present, it is then removed prior to fitting out work taking place.

Shareholder Relations

The Shareholder Relations Department provides a pivotal link with the Company's Registrar, Capita Registrars.

Employee Share Plans

Northern Rock has an established policy to involve employees as financial stakeholders in the Company and offers a wide range of employee share plan benefits. Over 80% of Northern Rock's employees participate in one share plan or another which emphasises that the workforce regards share ownership as an established part of Northern Rock culture.

Award Nominations - All Employee Share Plans

Employee Benefits Awards

ifs Proshare Awards

Northern Rock received recognition in the industry in 2005 and 2006 for commitment to employee share plans.

The ifs ProShare and Employee Benefit Awards recognise companies that demonstrate best practice through their annual reports, websites, employee share plans, employee benefits and financial education programmes, recognising their responsibility to shareholders and employees and to create the opportunity for a more financially literate population. Northern Rock received awards in the following categories.

Most effective all-employee share scheme strategy
Most effective use of financial education in the workplace

The judges were impressed by the outstanding take-up rate and stunning communications strategy. They said this was “a very slick, well presented entry that had gathered momentum after winning last year”. In 2005, two of the company's major sharesave schemes matured within four months of each other, with employees making healthy profits between £2,000 and £59,000. Northern Rock put in place a financial education programme to educate employees in capital gains tax planning and the importance of managing investment risk via diversification.

The following information provides an overview of the all-employee share plans currently in operation.

Share Incentive Plan (SIP)

Reward – free shares awarded at no cost based on percentage of salary

Features – the shares must be held in the Plan for 3 years, or to receive the shares free of income tax and NI a further 2 years

Eligibility – employed continuously for a 6 month period prior to the award date

A summary of existing awards are as follows:

Award Date	Appropriation Price	Original no. of participants	Shares allocated	No. of participants remaining	Shares remaining
April 2003	£7.11	2,042	239,855	1,464	183,252
April 2004	£7.663	2,236	238,488	1,881	206,239
April 2005	£8.008	2,504	223,989	2,258	204,695
April 2006	£11.25	3,120	201,545	2,993	194,051

Share Option Scheme (SOPS)

Reward – the option to purchase Northern Rock shares at a later date at a price that is fixed at the time of the award

Features – the share options are exercisable between the 3rd and 10th anniversary of the award date and a loan facility is arranged to purchase the shares at this time

Eligibility – employed continuously for 6 months prior to the award date

A summary of existing awards are as follows:

Award Date	Option Price	Original no. of participants	Options allocated	No. of participants remaining	Options remaining
June 1998	£6.18	2,358	3,019,506	132	175,462
July 2002	£6.41	3,782	3,782,000	368	362,900
January 2005	£7.73	4,463	4,463,000	3,848	3,848,000
February 2006	£11.27	5,623	1,405,750	5,215	1,309,500

Sharesave Scheme (SAYE)

Reward – a way of saving that offers a tax free return on savings and the opportunity to purchase shares in Northern Rock at a discounted share price

Features – save any amount between £5 and £250 over a period of 3 or 5 years. At the end of the savings contract, the savings and bonus can be converted to shares

Eligibility – employed on the invitation date

A summary of existing awards are as follows:

Award Date	Option Price	Original no. of participants	Options allocated	No. of participants remaining	Options remaining
2000 – 7 yr term	£2.15	149	494,128	127	435,293
2003 – 5 yr term	£5.98	215	188,023	170	157,505
2003 – 7 yr term	£5.98	144	126,907	121	105,487
2005 – 3 yr term	£7.27	1,099	373,754	951	327,790
2005 – 5 yr term	£7.27	574	434,867	527	409,380

Training and Development

People focus is a key ingredient of Northern Rock's success - towards its customers, through community activities, other stakeholders and the driving energy behind the Company's business performance; its staff.

The Company operates in a highly competitive market with continuously changing demands. It is therefore essential that the workforce is confident and well motivated. In support of this aim the Company provides comprehensive training and development programmes and coaching support. These are tailored to the individual's specific needs and in line with business objectives, providing real opportunities for career progression and development. By developing the competencies of its team, Northern Rock achieves increased proficiency, reduced operating costs, improvement in its approach to customer needs and improved business performance.

The Company's training initiatives are supported by a centralised Training function, guiding the corporate training priorities whilst delivering business specific courses through training teams dedicated to particular business operations.

A 'Building Skills' training approach is taken to training, with over 25,000 training days delivered during the year. Key stages of an individual's development in their career with Northern Rock are addressed within the framework from new recruit, first line team manager and new manager to senior management and executive level.

The skills and knowledge needed by an individual at each stage of development are included in the framework. The framework is available to all staff via the Intranet, its implementation supported via Induction and management training as well as through the Building Skills Shop. Opened in July 2005, the shop, which is based on a main thoroughfare at the Company's Head Office at Gosforth. Training representatives manage the shop, providing information and guidance on the education and training opportunities supported by the Company. In addition a programme of joint initiatives with external education providers is in place and promoted through the shop with further development scheduled. The Company also provides a Learning Centre for staff, a dedicated facility to support study for qualifications or use of Learning Bank material. This is in addition to the dedicated Learning Centre that supports trainees on the Company's Modern Apprenticeship Scheme.

Northern Rock Modern Apprenticeship Scheme

The apprenticeship programme enables learners to achieve an NVQ in either Business and Administration or Customer Service, Key Skills qualifications in Literacy and Numeracy and a technical Certificate in their chosen area.

This is a government-funded programme and all qualifications are nationally recognised. Due to funding restrictions all learners must be between 16-24 years old and complete the course within 1 year. Learners need to complete all components to gain the full apprenticeship framework.

Within the Training function, the Central Education and Development team manages company-wide training and education needs and resources.

Best practice material and resources are centralised with access supported via the Company's Intranet which hosts the online Learning Bank including information on courses as well as books, DVDs and other materials.

E-Learning

The development of e-Learning continues with the delivery and monitoring of induction and regulatory modules companywide. In addition classroom training on new systems and processes is supported by e-Learning.

Induction

As business needs develop, the Company's induction programme is continuously evolving. Support is provided via intranet modules, classroom teaching and model office practical sessions. Induction training starts with a one-day introduction to the practical aspects of a 'Normal Day' to demonstrate how Personnel policies, regulatory requirements and working practices impact on an individual within the workplace. Corporate Social Responsibility is incorporated within our induction programme and first line manager training as an integral part of everyday working life.

Educational Qualifications

All employees have the opportunity of applying for an educational qualification subject to criteria. At the end of 2006 there were over 700 students studying towards a qualification and over 250 more completing a qualification in the year.

Learning and Skills Council

Following a review of the Learning and Skills Council contract, Northern Rock was granted further provision from August 2006 to August 2007 to deliver 97 more Modern Apprentice Frameworks . A Framework consists of a Technical Certificate, NVQ and Key Skills relevant to the business. Both level 2 and level 3 qualifications are offered and a dedicated learning centre supports this scheme.

CeMAP Training (Certificate in Mortgage Advice and Practice)

The Company offers a comprehensive CeMAP and Lifetime training programme to all staff members either in a CeMAP or Lifetime role or with the potential to be in a CeMAP or Lifetime role.

Central Education and Development offers a comprehensive support programme to all CeMAP students in the form of study guides, revision courses and a registration service.

A CeMAP homepage attached to the Training Intranet site was launched in 2006, providing extra support to the current students. This will work alongside the current revision courses and study guides already available.

Customer Services Professional

This popular qualification underpinning customer service standards continues to be offered. A new study support framework was launched in 2006 providing study sessions, revision notes and papers to support students, through the programme. The recommended study time is 18 months.

NVQ

The NVQ programme remains an integral part of our education framework, 70 staff members currently undertaking a qualification, with over 30 completing during the year.

All areas of the business are offered the opportunity to participate in this programme as it covers Administration, Customer Service, Call Handling, Management and Sales.

Management Development

Management development is integral to the future of the organisation. It ensures Northern Rock has the potential within the management team to take on the future challenges and opportunities the growth strategy will continue to bring.

As part of its Building Skills approach Training provide ‘Leading a Team,' a modular programme providing new and existing first line team managers with training in essential skills and knowledge to support them in their role. The modular approach allows a tailored build up of skills relevant to an individual's needs.

The next level of management training, a new Management Development Framework, offers modules on Customer Management, People Management, Process Management, Risk Management and Business Focus.

Training for Senior Management launched in the Summer in 2006, providing support in Team Development, Negotiation and Presentation Skills. Further modules will be launched in 2007.

In addition to Training courses the opportunity for individuals to undertake the Diploma in Management Studies (DMS) at Northumbria University continues. In 2006, 17 members of staff graduated with the qualification and a further 20 commenced the course in September 2006, with 23 currently in their final year.

The four-year support framework of our Graduate Trainee Scheme continues to provide a key source of recruitment and development to senior management as part of our “Grow Your Own” philosophy. 24 trainees were recruited onto the new Graduate Development Programme in October 2006 from over 500 applicants following an assessment centre process. Successful applicants immediately take up real jobs within the organisation in a variety of business areas including Credit, New Loans and Savings operational areas, Sales, Marketing, Treasury, Finance, Group Legal, Group Compliance, Premises, IT and Personnel. Their development is underpinned by a series of programme events including short-term placements within other areas of the business, team events and Executive presentations on the Company's core business areas and strategy.

Employee of the Year (Fuller Osborn) Award

This annual award was established in 1991 to mark Fuller Osborn's contribution to Northern Rock during his 29 years as Chief Executive, and his belief in staff and their development and training. The award is judged by 3 criteria: job performance, study and community involvement - with the aim of recognising an individual's excellence in job performance, personal development, academic achievement and a wider contribution in terms of 'out of work' activities.

There is an excellent response to requests for award nominations which shows the significant effort that individuals are making in the day-to-day activities as well as outside of working hours. The winner in 2006 was Lorraine Graham.

Employee Achievement Awards

There are 5 achievement awards each year. Staff are asked to nominate colleagues who they think deserve an award.

The awards cover:

Education
Sporting Awards
Helping Others
New Starter
Unsung Hero/Heroine.

Nominations can be submitted on line via the Training Intranet site. Each winner is awarded £250 and is also invited to attend a celebratory lunch with our Executive Team.

Focus on Customer Service

Following a comprehensive Customer Service review undertaken by Northern Rock in 2004, the initial project team has been replaced by a new Customer Service Function that oversees the steering group and drives initiatives aimed at improving customers contact with the company.

Customer service excellence is a major goal in Northern Rock's drive for success and staff development provides a solid foundation for this. 2005 saw the launch of IDEAS (Ideas Delivering Excellence And Service) an initiative that identifies and rewards members of staff who successfully propose improved systems and/or working practices that raise efficiency and lift the business contact experience of customers.

Training and Competence

Responsibility for the Company's Training and Competence activities is embedded within each operational area and headed by the Training Director, managed through a company-wide steering group. In 2006 a streamlined competencies framework was developed and launched, integrating job assessment and descriptions, training and competence requirements for each role, and performance assessment and reward. This is supported by a quarterly competencies based review that provides a clear support process for all staff, for their development and contributing to annual performance assessment.

CPD (Continuing Professional Development)

The development of our CPD programme continued on a positive footing during 2006. This programme is an integral part of Northern Rock's overall Training & Competency regime and has been conducive to supporting staff across the business in maintaining their financial knowledge.

Central Education and Development continues to act as an intermediary support to the business to ensure that Northern Rock continues to meet with regulation requirements. In 2006 CPD developments were recognised by the award of ACCA Approved Employer status, a key achievement recognising the support provided by the Company to those in an accounting professional role.

Pre-retirement Training

The Company offers staff due for retirement the opportunity for them and their partner to attend a course to help them prepare for this change in their lives.

Resources

The Company offers a well-stocked educational library within Central Education and Development. Northern Rock will not consider purchasing textbooks/study aids for staff members studying towards qualifications. Students will have access to books from the Learning Bank.

Health and Safety Management

Northern Rock is committed to fully complying with all UK and European Health and Safety Legislation to ensure all staff work in, and customers visit, a healthy, safe and secure environment applicable to all its business operations.

With an emphasis to maintain and encourage a healthy working environment, the Health and Safety department works closely with all line departments to ensure risks are properly managed. This is achieved by production and implementation of health and safety management system procedures for risks and monitoring of the effectiveness of these procedures.

Structures are in place to ensure that health and safety responsibilities are met and mechanisms exist to monitor and review the health and safety performance of the company. In particular, the Deputy Chief Executive is appointed as the Director with responsibility for health and safety. An internal group reviews health and safety performance quarterly and consultative meetings are held with representatives from AMICUS, our staff union, on health and safety matters.

The approach being taken by Northern Rock is consistent with the targets contained in the Health and Safety Commission Strategy 'Revitalising Health and Safety'. This strategy and the approach being taken by Northern Rock has the principal aim of improving health and safety together with increasing corporate responsibility and accountability.

As a company committed to best practice in health and safety management, Northern Rock believes that a well-run business is safe, healthy and profitable.

Health and Safety Policy and Structure

The Health and Safety Policy has been produced and endorsed by the Executive Board.

Health and Safety Policy Statement

The following is the Health and Safety Policy Statement for Northern Rock:

Northern Rock is committed to best practice in health and safety management as we believe it is an integral part of a well-run business.
The protection of the health and safety of our own and other people who may come into contact with Northern Rock is vital to the success of our business. Consequently, the responsibility for health and safety rests with management.
Our aim is to eliminate all preventable illnesses, injuries and associated business losses. This will enhance the wellbeing of our staff and our business efficiency, both of which are important for our continued success.
To achieve our aim and continued success, Northern Rock is committed to:

Ensuring that clear management responsibilities are defined for high standards of health and safety, integrated with business processes.
Ensuring that an organisational structure exists that supports and monitors effective health and safety management.
Complying with all relevant Health and Safety and associated legislation.
Applying best practice for systematically assessing and managing health and safety risks with legislation defining minimum standards.
Continually improving health and safety by setting objectives, measuring, reviewing and publishing performance.
Recognising the importance and effectiveness of a consultative approach with staff and AMICUS, the recognised trade union, on how risks are controlled and to secure staff contribution to continuous improvement.
Supporting the implementation of the policy by appointing an Executive Director to champion and take lead responsibility for health and safety.
Providing competent advice on health and safety matters and adequate resources for implementation of best practice.
Ensuring premises, work activities and environments are safe.
Requiring business partners and contractors to operate to health and safety standards, which at least match our own.
Reviewing the policy to ensure its continued relevance and benefit.

A structure for management of health and safety has been established and responsibilities have been defined.

Health and Safety Management System

A health and safety management system based upon the guidance contained in the British Standard Institution publication OHSAS18001; Occupational Health and Safety Management Systems specification has been developed. This incorporates procedures for management of specific occupational health and safety risks within Northern Rock.

A Health and Safety intranet site exists to provide readily accessible information and guidance. Projects covered this year include:

Health and Home working

The policy and procedures covering the risks to staff from working at home has been revised. This will result in implementation of an Intranet based home worker health and safety assessment to ensure that risks to home workers are being managed.

Call Centre Operations

Within all call centre environments, noise exposure to staff from use of headsets has been evaluated against criteria in Control of Noise at Work Regulations 2005. This evaluation has concluded that there is no significant risk to employees from noise exposure by working in Northern Rock call centres.

Safety Policies and Procedures

Health and Safety during Construction

During 2006, significant activity took place on construction projects for development of Head Office facilities. As a client procuring construction projects, Northern Rock has established and implemented processes for managing health and safety risks from construction work. The approach taken by Northern Rock is consistent with best practice guidance such as the Respect for People - RfP Code of Good Working Health and Safety Practices and includes requirements for setting targets for elimination and reduction of risks during construction work.

Contractors

Existing systems for contractor evaluation have resulted in 112 contractors being approved. This means that contractors used by Northern Rock plc have been evaluated to ensure that their health and safety management standards are at least equal to statutory and Northern Rock specific health and safety requirements.

An audit process has been developed and implemented to ensure that third party organisations who operate at Northern Rock apply health and safety management practices that are equal to statutory requirements.

A system is in place to evaluate and score the health and safety management performance of contractors employed by Northern Rock. This ensures that contractor’s health and safety standards are at least equal to statutory and specific Northern Rock requirements.

During 2006, 24 contractors were evaluated.

Evaluation of contractor’s health and safety management has resulting in an increase to 112 of the number of contractors whose Health and Safety management arrangements have been approved.

No contractors have been removed from the list due to an unacceptable rating.

During 2007, the contractor evaluation process will be revised to ensure competence checking is consistent with requirements in forthcoming revisions to Construction (Design and Management) Regulations.

A permit to work system has been implemented to ensure that high risk activities are properly controlled.

Workstation Assessment

A system is in place to provide all computer workstation users with online training on best practice workstation ergonomics to avoid discomfort and injury. The system incorporates online assessment for evaluation and management of ergonomics issues associated with workstation use.

The system is supported by the training of workstation assessors to undertake follow-up assessments where computer workstation users require this as indicated during completion of assessments. During 2006, 62 workstation assessors have been provided with training and 2721 users have completed workstation assessment.

Management of Occupational Road Risk

Guidance has been produced and issued to all staff that drive as an integral part of their jobs and actions required for control of risks associated with driving at work. This guidance includes a policy on use of mobile telephones whilst driving in line with legislative requirements.

A programme for training drivers who are considered to be at higher risk due to the extent of driving associated with their job, was progressed during 2006, with 27 drivers provided with training.

Fire Safety

During 2006, fire risk assessments have been completed for all premises. This has ensured that compliance was achieved with requirements contained in Fire Safety (Regulatory Reform) Order 2005 when it came into force 1 October 2006.

Fire risk assessment has produced a risk rating for each premise. In future, fire risk assessments will be reviewed at a frequency dependent on the previous fire risk assessment rating.

Manual Handling

Procedures and training programmes have been implemented to manage risks associated with manual handling. These included:

Implementation of an online manual handling training facility for use by staff undertaking low risk manual handling activities.
Provision of specific manual handling training for staff involved in more complex, higher risk manual handling. During 2006, 10 staff were provided with specific manual handling training.

Accident Reports

There were 98 accidents reported to the Health and Safety Section compared to 87 during 2005 (note 2004 Report content amended). This represents a 13% increase. This is considered to be attributable to improved awareness on the need to report accidents.

In 2006 Northern Rock's accident incidence rate (AIR) was 49.8 which is better than the national average. This provides an indication of the rate of accidents that have occurred standardised per 100,000 employees. This rate is commonly used for comparison of an organisation's accident performance. The latest data available for 2005/6 indicated the national average AIR being 99.1 for financial based industries. Ref: injuries in Great Britain by industry and severity of injury 2005/6 published by the Health and Safety Executive.

Table 1 –

REPORTED ACCIDENTS 2000/2001/2002/2003/2004/2005/2006

	Accidents Reported	RIDDOR Reportable	Slips / Trips / Falls	RIDDOR Minor Accidents	RIDDOR AIR*
2000	34	3	N/A	N/A	N/A
2001	53	4	20	29	117
2002	53	5	19	29	128
2003	155 ¹	10	15	75	240
2004	86 ²	4	34	48	77.7
2005	84	8	37	47	137
2006	98	3	49	49	49.8

Footnote

Audit of accident books and promotion of reporting resulted in increased value
Original 2004 reported as 84, however 2 accident reports were received in 2005 that related to 2004 accidents.

Whilst the total number of accidents has increased in 2006, there has not been an increase in severity of reported accidents or any particular trend. It is considered that the increase is attributable to improved awareness of need to report accidents achieved by manager training.

Work Related Sickness

This is defined as absences due to the following categories; backache/backpain, musculoskeletal conditions and stress. Table 2 shows the number of days lost due to each category during 2006.

The total work related days lost represents 36% of total sickness absence in 2006. This is an increase from 19% in 2005, of the total days sickness absence 47,161.5 days in 2005, compared with 29,301 days during 2005.

During the same period employee levels within the Company rose 13%.

Sickness Type	Days Lost 2003	Days Lost 2004	Days Lost 2005	Days Lost 2006
Muscular Skeletal	211.5	528	400	1784.5
Backache/Back Pains	942.5	1,115	2041	3054.5
Stress	678.5	900	4809	12434.5
Accident Injuries	720	356	13	20
Total	2,552.5	2,899	7263	17,293.5

Illness/Incident Rate

	2003	2004	2005	2006
Lost time illness rate (all causes)	4.8 days pa per person	4.6 days pa per person	5.02 days pa per person	7.83 days pa per person
Lost time incident rate:
Headcount/Riddor reportables*100,000	236.7	77.1	137.0	49.8
Benchmark Office Based Industries ¹	121.3	173.4	162.2	99.1

Rates of non fatal injury to employees in Business and Finance Industry Sectors, Source HSE Statistics

Corporate Health and Safety Performance Index (CHASPI)

Corporate Health and Safety Performance Index ((CHASPI) is an on line index that enables companies to examine their own health and safety management arrangements and enables stakeholders to view the information and compare with other companies.

Northern Rock Health and Safety Management details have been provided to CHAPSI. This has produced a favourable initial rating although until other organisations within banking and finance sector provide details, true comparison will be limited.

Northern Rock's 2006 data is being included in the CHASPI Index.

Employee Consultation on Health and Safety

Regular quarterly forums have taken place to consult trade union appointed health and safety representatives on progress.

Occupational Health

The Occupational Health service provided support in relation to medical screening of new employees and sickness absence management.

Medical details of 137 new employees were referred to Occupational Health for evaluation of health conditions identified at commencement of employment.

In supporting absence management, 480 cases have been referred to Occupational Health to establish additional support needs and assist staff returning to work following absence.

During 2007, the Occupational Health referral process will be changed to ensure prompt referral for staff experiencing absence due to mental health related issues. The aim of the change will be to provide early referral where appropriate.

Workplace Refurbishment

As part of a project to refurbish existing branches, ergonomic aspects of facilities provided for use by staff have been evaluated in conjunction with an external ergonomics expert. The recommendations of the evaluation are being incorporated into revised designs to ensure the new working environment does not present any unnecessary risks to staff or customers.

Asbestos Management

All premises have been surveyed for the presence of asbestos containing materials. The survey showed 27 premises have asbestos containing materials present.

Where asbestos can be readily removed, this has been done. In locations where asbestos materials are safe to remain in-situ until it can be removed as part of future refurbishment this approach is being taken. The aim of Northern Rock asbestos management programme is to remove all asbestos materials where practical.

Employee Physiotherapy Service

The service enables referral and rehabilitation of staff that have musculoskeletal conditions that affect their ability to work comfortably. This approach of providing rehabilitation to staff is consistent with the aims of Northern Rock Health and Safety Policy and national initiatives contained in the Health and Safety Revitalising Health and Safety Strategy.

During 2006, 83 employees were referred to the physiotherapy service. The outcome of referral was that 76% of referred employee's musculoskeletal conditions were fully resolved. The overall benefits to individuals are that ability to work comfortably is enhanced and from a corporate perspective this contributes to absence reduction.

Early referral is key to the success of physiotherapy intervention. To support this, a process for quick assessment and referral of staff absent with back pain or musculoskeletal problems has been implemented.

A back care programme has been implemented that utilises on-site gym facilities to assist in recovery of staff with chronic back pain or musculoskeletal problems. The back care programme supports staff by providing a supervised exercise based rehabilitation programme that staff will be able to continue themselves after initial guidance and instruction.

Manager Health and Safety Training

As part of a corporate management development training programme, a health and safety training module has been produced and delivered. This covers the key points contained in procedures that managers need to know to fulfil their health and safety responsibilities effectively . To enable all managers to be provided with the training, an on-line version of the programme has been introduced.

Health Awareness

Escape Fitness Suite

The Northern Rock Fitness Suite "Escape" opened during 2003. The fitness programme runs in conjunction with a Health Awareness Campaign being promoted by and within Northern Rock.

Gym Membership

Date	Staff Number
31 December 2003	652
31 December 2004	870
31 December 2005	938
31 December 2006	968

The Suite has been resourced to ensure staff are encouraged and motivated to use the facilities, including:

Fully Air Conditioned Gymnasium with the latest Fitness equipment.
Regular and diverse class timetable.
Saunas/Sunbeds and Beauty Therapy.
Friendly Atmosphere.
Personal Training.
Highly qualified motivated staff.
Free fitness assessments - to work out strengths and weaknesses.
Free fitness programmes - gauged to individual goals.
Adidas goods and products for sale at discounted prices.

Personal Assessments when Joining the Club

A lifestyle profile is offered, with health checks including height, weight, and body composition, blood pressure and lung function tests..

The fitness test includes aerobic capacity, flexibility, endurance strength and explosive power. This test is optional and is used as a benchmark for designing an individual client programme.

Every 6 weeks clients are advised to have a reassessment to check their progress. For additional cost cholesterol testing is undertaken as part of a healthy heart programme. This includes a full consultation of the main factors that contribute to coronary heart disease and from the test the biological age can be calculated and appropriate advice provided on healthy eating, weight management and lifestyle changes.

Personal Training

Staff may struggle to reach fitness goals but can be helped by using an Escape personal trainer. The personal training service is unique to the individual and their needs, providing support, guidance and expert knowledge to attain individual goals. The service includes an in depth consultation, a structured training plan and advice on diet & nutrition. Studio Classes are offered on a daily/weekly basis and include:

Classes Offered

Spinning.
Body Pump.
Circuits.
Body-sculpt.
Step.
Boxercise.
Fitball.
Aerobics.

Social Events

Not only is joining Escape Fitness beneficial for Health and Fitness but there is also an emphasis on the importance of social events. Activities are arranged by Escape staff and members are encouraged to provide ideas for events.

Programme Events

The Northern Rock Corporate Decathlon.- Escape helped to monitor and progress the Northern Rock's team fitness i.e blood pressure, height weight & VO2 tests
The Tiny Lives Charity Day - Escape planned, prepared & organised all gifts/prizes for all the children's events
The Northern Rock Challenge - Escape represented NR in 6 events which helped NR to finish second