Retail reward managers have defended some of the biggest staff bonuses on record, despite business experts predicting 2009 will be the worst year on record for the sector.
Supermarket giant Asda paid out its largest ever bonus to staff on 13 February, costing £21m for all 127,000 employees. More than 50,000 staff at rival Tesco will share £126m from the retailer’s Save As You Earn (SAYE) scheme, with some receiving over £5,600.
Yet last month Tesco admitted it was expecting the year ahead be tough, as it lost out on sales to Asda over the Christmas period. Underlying sales at Tesco were up just 2.5% in the seven weeks to 10 January. Like-for-like sales at Asda, the UK’s second biggest supermarket, were up 7.2% on the quarter.
Louise Pocock, UK benefits manager for Tesco insisted the approach to reward was fair despite a fall in profits.
“These bonuses are available to everyone from the shop-floor to the board room, and its benefit stretches right through to retention and even employee engagement,” she told Personnel Today.
“It’s important that everyone feels welcome at work, and providing bonus schemes like this is a way to say ‘thank you’ to employees, so they feel they can share in the success of the company.”
Jane Earnshaw, UK reward manager for Asda, said: “It’s not like the financial sector, because this is purely profit-driven and staff still receive their hourly wage – there are no targets or measures that are hard to attain.”
She added that bonuses were an important retention tool, crucial in a competitive retail market.
Earlier this month Personnel Today reported that reward strategies were undergoing a radical revamp as employers battle to retain talented workers while cutting costs during the recession. But the UK Pensions Regulator yesterday urged employers not to slash pension contributions amid the financial turmoil.
Tesco is one of the few remaining retailers that offers a final salary pension to all staff, with more than half (160,000 out of 270,000) enrolled. At Asda, 5,000 of the 125,000 workforce have a final salary pension.