Prioritise health & safety, promote diversity and nurture the wellbeing and skills development of employees, and support the communities that they are part of

Our Sustainability improvement objectives

Drive our businesses to follow best health and safety practice across operations, respect employees’ human rights and positively contribute to their communities by implementing effective policies and procedures, supported by local management accountability and a culture of strong awareness, training and investment
Ensure the pension schemes that we inherit are managed prudently and effectively for both employees and retirees, and where relevant, seek to create better-funded schemes with more prudent targets under our stewardship
Promote diversity and inclusion at all levels
Promote fair employment and skills development
Ensure that our people have a voice and can inform executive decisions.

A great place to work Employee engagement Health and safety Pensions Reward and recognition Gender pay gap reporting Diversity and inclusion Talent and career management Community

UN SDGs

People

A great place to work Employee engagement Health and safety Pensions Reward and recognition Gender pay gap reporting Diversity and inclusion Talent and career management Community

Promoting diversity, prioritising and nurturing the wellbeing and skills development of employees, and contributing to the communities that they are part of, is instrumental to our success and the impact in the regions of operation.

We endeavour to increase positive contributions and minimise the negative impact of business activities on the communities. This approach enables us to create transparency around, and ensure continuous growth of social contributions and support, thus complementing our strategic business agenda with a macro social perspective.

Employee engagement

Melrose Skills Fund

The Melrose Skills Fund was launched in 2019 to provide the financing to develop the capabilities required to build the UK’s industrial base, and is utilised by our GKN Aerospace, GKN Automotive and Brush.

With a commitment to invest £10 million over five years through the creation of STEM programmes, apprenticeships and degrees to invest in manufacturing hubs, digital skills, and employee development, Melrose is helping to equip the UK with the future skills it needs to grow its industrial skillset.

Simon Peckham, Chief Executive

Policies & Statements

Chairman's Statement

A great place to work

We realise that, to perform well and achieve our business objectives, it is important to nurture an engaged, capable and enthusiastic workforce. We want to ensure that our people are always prioritised, and that they enjoy the work they do, with no concerns of any safety or wellbeing risks. We value and champion diversity in its broadest sense and always seek to create working environments that nurture employees and encourage them to grow and act with integrity. Our policies relating to recruitment, talent development and succession planning are supported by training programmes and effective management, helping us ensure that employees are provided with relevant opportunities for career development and growth.

Employee engagement

Melrose Skills Fund

Simon Peckham, Chief Executive

Policies & Statements

Chairman's Statement

Employee engagement

We recognise the importance of engaging with our employees in a meaningful way to support their development and for us to deliver better business performance.

We regularly consult with employees across the Group, and are highly responsive in addressing employee concerns which we receive through all-employee engagement surveys. The insights are always shared with executive teams, plant directors, HR teams and other people leaders for further analysis through employee focus groups. We always take these insights into consideration when developing action plans to help address areas for improvement, be that on a global, site or individual team level.

In 2019, Melrose established a Group Workforce Advisory Panel (“WAP”) to enable key views of the workforce to be heard and considered by our businesses’ executive teams where they can have maximum impact. The WAP reports to the Board annually to provide visibility and oversight of key workforce views, which are then discussed at Board meetings. Such oversight by the Board also ensures that the WAP and its underlying engagement processes are operating effectively for each business.

Employee engagement

The WAP is chaired by a member of the Melrose senior management team and includes HR subject experts, each of which is responsible for promoting workforce engagement, disseminating information and collating the voices of workforce. Each member of the WAP is responsible for demonstrating how key workforce views are fed into executive management decisions, as well as ensuring that the workforce is aware of their impact.

Key workforce views in 2022 related to learning and development opportunities, particularly in the context of the current macroeconomic climate.

For more details on our engagement with employees, please see our 2022 Sustainability Report.

c.£8m

invested in workforce training during 2022

Group employees as at 31 December 2022
Permanent employees of which:	38,691
Full-time employees	37,694
Part-time employees	997
Temporary employees	4,691
Apprentices	406
Total	43,787

Safety first

We always seek to prioritise the health, safety and wellbeing of employees and contractors, in line with our commitment to setting high standards and ensuring that effective policies, procedures and training are in place.

We take a holistic approach to employee wellness, which starts with protecting their physical and mental health, protecting their social wellbeing, and respecting their human rights, and extends to ensuring a positive workplace culture that attracts and retains a highly skilled workforce. To this end, in 2021 we implemented a Group-level target to achieve an annual LTA Frequency Rate of below 0.1, which underpins our overarching commitment to stop all preventable accidents from occurring within our workforce and contractors, through the promotion of safe behaviours across all locations, and an enhanced focus on hazard identification and awareness. In 2022, we maintained a LTA Frequency Rate of below 0.1, and continued to prioritise continuous health and safety improvements in the push for the LTA Frequency Rate of zero.

To meet the highest health and safety standards at workplace, we always seek to implement operational best practices, maintain a robust culture of health and safety awareness, training and performance, ensuring comprehensive audits and focus on continuous improvement.

This is delivered through the Group health and safety management framework and supported by health and safety effectiveness audits, external assurance reviews conducted by the Group’s insurance brokers, with regular oversight and challenge by the Melrose senior management team, quarterly reporting to the Board, and further regular oversight over any material incidents or issues that arise.

As at 31 December 2022, 76%⁽¹⁾ (2021: 75%) of sites (inclusive of office, production and testing sites) within the Group were certified to the ISO 45001 international standard, with additional relevant sites progressing towards accreditation.

For more details on how we prioritise safety and wellbeing, please see our 2022 Sustainability Report.

^{(1) Data was collected from 98% (by sites) of the Group.}

Health and Safety

Group Health and Safety Management Framework

Health and safety training

Health and safety training is a prerequisite to achieving our Group LTA frequency target, with all employees receiving training on a regular basis. Awareness of health and safety issues and the Group’s policy on health and safety is included in induction training for all new joiners across the Group.

All our employees have access to the online thinkSAFE! training portal and must complete at least one module per quarter. Training modules vary in content and are complemented by other technical health and safety training related to specific operations.

Health and safety performance

We are focused on cultivating a strong safety culture within operations through emphasising the importance of preventing avoidable incidents and implementing near miss reporting, which requires an enhanced focus on hazard identification and awareness. Behaviour-based programmes and continuous training and awareness campaigns remain central to the approach in improving safety performance.

Each site is expected to perform regular risk assessments and use a variety of health and safety KPIs which are specific to the exact nature of the operations and associated risks. To provide visibility and oversight for the Board, information is collated quarterly on three key performance indicators: Major Accident Frequency, Lost Time Accident Frequency, and Accident Severity Rate. Although responsibility for health and safety rests with the operational teams, in the unfortunate circumstance of a very serious incident, the Melrose senior management team will engage directly with the executive management team and report any actions taken directly to the Board.

View our KPIs

Health and Safety

Safety performance indicators

Lost Time Accident Frequency Rate
Average number of LTA's, both major and minor, per 200,000 hours worked.

Major Accident Frequency Rate
Average number of LTAs resulted in more than three days off work (defined as 'major' accidents), per 200,000 hours worked.

Accident Severity Rate
Average number of days taken off following an accident at work

* FY 2022 data covers continuing businesses at the time of collection

Pensions

With every acquisition, Melrose seeks to strengthen pension scheme arrangements for the benefit of employees and retirees, improving the probability that all historic benefit promises are met in full. We take pride in having substantially improved all of the UK pension schemes under our ownership, with many of them becoming fully funded on departure from the Group. For example, under Melrose ownership, the McKechnie UK pension scheme was improved from 58% funded at acquisition to more than fully funded upon leaving the Group, and the FKI UK pension scheme was improved from 87% funded at acquisition to fully funded upon its departure from the Group. Both of those schemes were sold into Honeywell International Inc., a US-listed group with the financial covenant strength expected of a market capitalisation exceeding US$140 billion.

More about Pensions

People

Pensions

Our focus on strengthening pension schemes begins from when we acquire a new business, and the GKN pension schemes are the latest example of this. The GKN UK defined benefit pension schemes had been chronically underfunded, and we were proactive, transparent and constructive in agreeing commitments with pension trustees during the acquisition of GKN. Prior to acquiring GKN, we committed to providing up to £1 billion of funding contributions, which included doubling annual contributions to £60 million, on top of providing £150 million of immediate contributions. In our short period of ownership, we have met our commitments and have significantly strengthened the pension schemes. For example, so far we have:

Eliminated the GKN UK defined benefit pension scheme accounting deficit.
Agreed more secure funding targets of Gilts +25 basis points (GKN 2016 scheme prior to its 2021 buyout) and Gilts +75 basis points (GKN 2012 schemes 1-4) to achieve more prudent funding targets and therefore less risky investment strategies.
Rebalanced the GKN schemes across the GKN businesses to avoid overburdening any one business and to provide stability and better security for members.
Having funded the GKN 2016 scheme to 115%, arranged a buyout with an appropriate insurer that secures the futures of over 8,000 pensioners’ member benefits.

Our model for ensuring the long-term prosperity of our businesses’ pensions schemes is founded on the following principles:

Set realistic and prudent funding targets to ensure improved financial health for the long-term delivery of members’ benefits.
Increase funding levels during our period of stewardship.
Provide better structural and financial security to our businesses’ pension schemes during our ownership.
Insist on independent trustees to chair our businesses’ pension schemes in accordance with governance best practice.
De-risking our businesses’ pension schemes through appropriately prudent discount rates, relatively unadventurous investment return targets and hedging against changes to liabilities arising from inflation and/or interest rate movements.

Securing our employees’ and retirees’ futures through responsible stewardship of their pensions is of strategic importance to the Board.

Reward and recognition

Each of our businesses has policies in place relating to recruitment, talent development and succession planning, supported by training programmes and effective management. They are required to ensure that relevant opportunities are in place for employees to discuss career development with their direct managers, and each business encourages internal applications for open positions. In 2022, 12% of open positions were filled by internal candidates (2021: 20%)⁽¹⁾.

Reward and recognition

Where permitted by local laws and employee representative bodies, performance evaluations are undertaken across our businesses, with 46% of employees receiving a performance appraisal in 2022 (2021: 45%)⁽¹⁾. At the time of writing, performance evaluations for 2022 were ongoing. In the pursuit of improvement, in 2022, GKN Automotive committed to ensuring that all permanent employees receive performance reviews by 2024. It has also revised its evaluation guidance and improved the communication of the performance calendar across employees.

Annual salary reviews are aligned with performance evaluations where applicable to ensure that employees are paid fairly and correctly for the position they hold. In compliance with all applicable local laws relating to the provision of pensions, over 70% of the Group’s permanent employees (by headcount) benefit from being a member of a company-based pension scheme.

Other forms of employee recognition are in place across our businesses to identify and reward individuals for their contribution. For example, GKN Aerospace hosts annual Excellence Awards which are open to all employees. In 2022, over 190 entries were received showcasing the great work that is being done across the business and within local communities. Winners and highly commended entries were selected across eight categories and from eight countries. These categories included Living the Culture Principles, Health and Safety, and Quality and Customer Excellence. The Excellence Award winner for the Living the Culture Principles category in 2022 was the Connected Women Employee Resource Group, who created a support network for women throughout the business and have markedly raised awareness of the importance of diversity, inclusion and belonging. Several GKN Automotive sites have created specific awards linked to its values and commitment to publicly recognise and reward employees for their contribution to the success of its plants. These awards are delivered during monthly business results meetings in the presence of leaders.

^{(1) Data was collected from 100% (by headcount) of the Group in 2021 and 2022.}

Gender pay gap reporting

The gender pay gap indicates the percentage difference in the mean and median base and bonus pay between all employees in the workforce. Gender pay gap reporting legislation in the UK requires organisations with 250 or more employees to report annually on the pay gap between their male and female employees.

GKN Aerospace: UK Gender Pay Gap Report 2022

Diversity and Inclusion

Our commitment to create and maintain a diverse, inclusive and safe environment is a priority for Melrose. We recognise the importance of diversity in building a high-calibre workforce and are committed to championing diversity in the broadest sense, be that along geographical, cultural or personal lines, encompassing gender, race, ethnicity, country of origin, nationality, colour, social and cultural background, religion, family responsibilities (including pregnancy), sexual orientation, age and disability.

We are actively engaged in finding ways to increase diversity across the Group, and the aerospace sector in large. Melrose ensures that entry into, and progression within, the Group is based on aptitude and the ability to meet fair criteria outlined in job descriptions. For any employees with a disability, we take steps to ensure reasonable adjustments are made where required. Melrose is proud to be a member of the Business Disability Forum, a not-for-profit member organisation that works with the business community to understand the changes required in the workplace for disabled persons to be treated fairly, so that they can contribute on an equal-opportunity basis to business success, society and economic growth.

The Melrose Code of Ethics highlights the importance of diversity and inclusion and is supported by our Board of Directors’ Diversity policy and our Melrose Diversity, Equity and Inclusion policy, both of which are reviewed and approved each year by our Nomination Committee.

For more details on gender diversity across the Group, please see our 2022 Sustainability Report

See our diversity and inclusion policies

Diversity & Inclusion

Promoting diversity at all levels

The Melrose Code of Ethics highlights the importance of diversity and inclusion and is supported by our Board of Directors’ Diversity policy and our Melrose Diversity, Equity and Inclusion policy, both of which are reviewed and approved each year by our Nomination Committee.

Gender diversity at Board level

	Male	Female
At 31 December 2022	6 (60%)	4 (40%)
At 31 December 2021	7 (58%)	3 (42%)
At 31 December 2020	7 (70%)	3 (30%)

Total Group employee gender diversity at 31 December 2022

	Male	Female	Total
Total Group employees	30,815 (80%)	7,876 (20%)	38,691

Talent and Career Management

In line with our commitment to promoting employee career development and life-long learning, we are proactive in anticipating employment needs and skills requirements for the success of our workforce. Boosting productivity is central to our strategy to improve performance across operations, all of which are encouraged to ensure that extensive training opportunities are available and promoted to all workers at all stages of their careers and that high skills levels are cultivated and maintained across the Group.

Training programmes start with new-hire onboarding programmes to accelerate knowledge and exposure to the business culture, strategy, and objectives. A wide range of learning opportunities are provided throughout career, extending beyond functional skills development to personal development and leadership opportunities, and all employees are encouraged to actively engage in their career development.

Leadership training is an integral part of ensuring the workforce remains engaged and innovative. Sites are encouraged to develop a diverse pipeline of successors for key roles and leadership positions to secure robust succession strategies. Annual talent reviews help identify individuals who have the ability and aspiration to grow into more stretching roles. Leadership programmes are carefully selected and tailored to reflect the local environments and nature of operations to ensure our employees remain motivated and competitive. These programmes are becoming increasingly popular and receiving positive feedback.

GKN Aerospace has a global development programme in place for new leaders. Set4Success was launched in 2021 with over 300 participants and has continued to receive positive feedback throughout 2022. Its objective is to ensure that each leader has the core fundamental soft skills to complete their role effectively, to be able to lead an engaged team that works productively together, and to improve their communication style and skills.

GKN Aerospace also continues to operate its Future Leaders and Leaders of Leaders development programmes which help to identify and assess potential employees who have the ability and aspiration to grow into larger roles, and who are successors for key roles and leadership positions. In 2022, over 120 employees were selected to participate in a rigorous assessment programme and benefit from having an accelerated development plan. Furthermore, in 2022 GKN Aerospace also piloted a Commercial Development and Collaboration Programme which was created to ensure that the teams provide high-standard customer service. Participants are supported in developing communication, influencing and negotiation skills, which aims to improve employee retention in the long term. Over 30 employees participated in the pilot which commenced in October 2022, with a further cohort of 160 employees due to take part in 2023.

People

Talent and Career Management

Leadership programmes in our business

GKN Aerospace has a global development programme in place for new leaders. Set4Success was launched in 2021 with over 300 participants and has continued to receive positive feedback throughout 2022. Its objective is to ensure that each leader has the core fundamental soft skills to complete their role effectively, to be able to lead an engaged team that works productively together, and to improve their communication style and skills.

GKN Aerospace also continues to operate its Future Leaders and Leaders of Leaders development programmes which help to identify and assess potential employees who have the ability and aspiration to grow into larger roles, and who are successors for key roles and leadership positions. In 2022, over 120 employees were selected to participate in a rigorous assessment programme and benefit from having an accelerated development plan. Furthermore, in 2022 GKN Aerospace also piloted a Commercial Development and Collaboration Programme which was created to ensure that the teams provide high-standard customer service. Participants are supported in developing communication, influencing and negotiation skills, which aims to improve employee retention in the long term. Over 30 employees participated in the pilot which commenced in October 2022, with a further cohort of 160 employees due to take part in 2023.

Training opportunities across the businesses

Our businesses deliver a variety of flexible training programmes through a combination of online and in-person training. In 2022, nearly 80% of employees receiving training during the year. GKN Aerospace’s employees continued to be encouraged to build their lean capability and gain associated certifications within its Lean Learning Academy, designed and launched in 2020 to provide frameworks to improve health and safety, work performance and reduce inefficiencies using the Lean Six Sigma principles. The business now has over 6,800 employees certified to lean foundation level, over 680 trained to lean advanced level, and over 360 certified to lean advanced level. In addition, over 350 people achieved the Six Sigma Green Belt, and 50 people were awarded with Six Sigma Black Belt. GKN Aerospace also launched a new non-conformance management training programme in 2022 to supplement the wider effort of standardising site-level systems for quality teams.

	2022	2021	2020
Average training time per employee (hours)⁽¹⁾	17	23	13
Average training spend per employee (£)⁽²⁾	183	209	166
Total number of training hours⁽³⁾	729,474	929,878	338,406
Total annual spend on workforce training (£)⁽⁴⁾	7,992,943	8,384,837	8,591,293

^{(1) Data was collected from 100% (by headcount) of the Group in 2022 and 2021, and from 39% in 2020.}
^{(2) Data was collected from 98% (by headcount) of the Group.}
^{(3) Data was collected from 100% (by headcount) of the Group in 2022 and 2021, and from 39% in 2020.}
^{(4) Data was collected from 98% (by headcount) of the Group.}

Community

Community investment is inspired and overseen by the Melrose Group which provides GKN Aerospace's executive management team with the authority for choosing which specific causes to support. Employees are encouraged to engage in contributing to local charitable and community initiatives, and lead by example through the sponsorship of such projects. In 2022, GKN Aerospace participated in a wide range of community development initiatives, providing significant investment in both volunteering time and material resources. These initiatives included donations towards the restoration of a renowned modified Mk1 Spitfire aircraft and provision of apprentices to work on the aircraft.

As part of environmental programmes focused on local community development, GKN Aerospace implements a range of initiatives from planting trees at its sites in Solihull, UK and Jingjiang, China, to supplying a school in Bangalore, India with plantable seed pens, reducing 900 plastic pens to landfill.

In 2022, Group’s cash donations to not-for-profit charitable organisations totalled over £1 million, including continuing businesses owned by the Group last year.

Melrose Skills Fund

Since the acquisition of GKN in 2018, the Group has been successfully delivering on its commitment to contribute to the UK’s industrial base. From its very creation, the Melrose Skills Fund, a £10m fund allocated over five years across the UK, to promote engineering skills, has been successfully accelerating the upskilling of technical workforce and inspiring the next generation of engineers.

For more information on key projects supported by the Melrose Skills Fund, please see our 2022 Sustainability Report.

In Focus

The Melrose Skill Fund

Commitment	Achievements
Support our businesses through the Melrose Skills Fund	GKN Aerospace has utilised the Melrose Skills Fund to accelerate the upskilling of its technical workforce. For example, in line with the strategic agenda of producing sustainable products, formal lifecycle analysis training and courses based on the Zero Defect Manufacturing method are delivered to increase workforce expertise, improve product management, quality, and delivery. The GKN Aerospace Learning and Education Hub at its Global Technology Centre in Filton, UK, continues to act as a facility for delivering training programmes and STEM activities, such as active engagement with early careers in schools and colleges. GKN Automotive has utilised the Melrose Skills Fund’s investment for staff development, providing 17 courses in EV-related engineering subjects and providing 12 engineers with an opportunity to pursue system engineering development training.
Enhance and grow the current R&D facilities at GKN Automotive’s Innovation Centre in Abingdon, UK	In 2021 alone, GKN Automotive utilised over £1.2 million of the Melrose Skills Fund to support its Innovation Centre in Abingdon, UK. Part of this funding was used for the launch of its Advanced Research Centre focused on developing next-generation eDrive technologies for future EVs, complemented by a partnership with the University of Nottingham and Newcastle University to increase knowledge and capability in the automotive electrification area and strengthen R&D in the UK. In 2022, the Centre had six research projects running, engaging six GKN Automotive engineers, a further six university researchers and an additional two PhD students who are developing GKN Automotive’s cutting-edge innovation roadmap.
Create 100 to 150 new apprenticeships in engineering, technology and science	From 2018 up to 31 December 2022, the Melrose Skills Fund has enabled our GKN Aerospace and GKN Automotive businesses to create 217 UK apprenticeship opportunities, as part of its commitment to promote aerospace careers and engineering among the next generation. GKN Aerospace has supported and invested in the restoration of the historic modified Mk1 Spitfire aircraft which will return to flight in 2024. The business has provided its apprentices to work on the aircraft, while its education programme which runs alongside the restoration project aims to reach out to almost 100 schools around the UK with the support of digital education platforms and the launch of a new careers network aimed at bringing students and industry face-to-face.
Support higher education colleges around our GKN Aerospace and GKN Automotive businesses in the South West, the Midlands and Oxford	As member of the Automotive Council’s skills working group, GKN Automotive is proactively using its position, expertise, technical and testing facilities to improve EV skills and expertise, provide training and enhance the talent pipeline in the UK. With the backing from the Melrose Skills Fund, it continues to support the Institution of Mechanical Engineers’ Formula Student Programme, a testing ground for the next generation of world-class engineers. As part of the competition, university teams worldwide compete to build and race a track cart and develop technical and business strategies to market it. GKN Automotive has sponsored the teams from University of Nottingham and Oxford Brookes University, providing mentoring, technical expertise and testing facilities support to develop their electric drive trains. In 2022, Oxford Brookes University team won the best engineering design award. GKN Automotive’s UK Innovation Centre has also become the southern region sponsor of Primary Engineer, a UK-wide STEM engagement programme to encourage schoolchildren to engage with the subject of engineering. GKN Automotive also supported the IET Faraday challenge with six local Oxfordshire secondary schools, providing both sponsorship and two mentors for guidance and support. As a supporter of a UK charity which gets young people enthusiastic about science and engineering by challenging them to design, build and race an electric car, GKN Automotive also provides local primary and secondary schools with funding and mentorship. The go-kart scale electric cars built by pupils were also featured at the Formula Student Silverstone competition which was focused on STEM engagement in 2022, providing pupils with an opportunity to engage with university students and get a snapshot of their potential future education and career in engineering.

Employee wellbeing

Our holistic approach to employee management recognises the importance of protecting employees’ physical health, as well as their mental and social wellbeing. It rests upon three key areas of diversity and inclusion, effective employee engagement and ensuring health and safety conditions in the workplace.

Employee wellbeing programmes are chosen on the basis of their impact and relevance.

All employees are provided with access to Employee Assistance Programmes which are designed to help them and their families deal with difficult life issues, ranging from counselling support, mental health and wellbeing advice and guidance on legal and financial queries, which is gaining importance against a backdrop of increased cost of living. The service is free and provided on a confidential basis, 24 hours a day, seven days a week.

For more information, please see our 2022 Sustainability Report.