Discount scheme slashed while top dogs split £20m

Employees
at high street retailer WH Smith have been told that their generous discount
scheme will be slashed in half – only days after it emerged that senior executives could share a £20m bonus
payout.

Although
cutting the discount from 25 per cent 12.5 per cent brings WH Smith in line
with most other retailers, experts warned that the move may damage the morale
of staff who are being asked
to help turn the company around.

WH
Smith has seen profits fall and sales decline, due to a combination of
increased competition from supermarkets and problems with its supply chain.

"If
staff are attracted because
of employee discounts, there is a danger that cutting them may affect the
company’s ability to recruit new staff and could lead to people leaving,"
said Charles Cotton, adviser for reward at the Chartered Institute of Personnel
and Development. "That could lead to a spiral of demotivation which would end up having an impact on
customer service and the bottom line."

WH
Smith claimed the new move was not aimed at saving money, but at making the
discounts "easier to understand" for staff. Previously goods in a
sale or a special promotion did not attract a discount, but now everything
could be bought by staff at a reduction of 12.5 per cent, the company said.

Days
before the discount cut was announced, it emerged the 40 top managers at WH
Smith stood to earn almost £20m in shares in three years’ time, if the
company’s share price meets certain criteria.

Under
the scheme, which needs shareholder approval at a meeting later this month,
chief executive Kate Swann could earn £3.9m if the company performs well.

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