John Lewis is to consider suspending its staff bonus as it grapples with the impact of its worst Christmas trading since the 2008 financial crisis – The Guardian reports.
The employee-owned department store released a statement saying it would “need to consider carefully … whether payment of a bonus is prudent in the light of business and economic prospects at that time”.
Patrick Lewis, Finance Director of the John Lewis Partnership, said the group could afford to pay a modest bonus but would wait until March to on how much this would be.
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Lewis is reported in the Guardian as saying “unusual economic circumstances” and the current volatility around Brexit spurred the decision.
He did say that the trading results the firm did enjoy – they experienced year-on-year sales growth of one per cent – were down to the “the extraordinary efforts of Partners in our business.”
Sir Charlie Mayfield, Chairman of the John Lewis Partnership, told the BBC that he had to consider that the business was employee-owned when paying out.
“Every year the board looks at what we can afford to pay in bonus in March,” he added. “What we’ve said is because of the steps we’ve taken we’ve got a strong financial position and we can afford to pay a bonus.
“The question is whether it’s prudent to do so. In our business, it’s owned by the people who work in it, we live within our means and we have to take account of what’s coming up.”
GlobalData shows that previous times that John Lewis suspended its bonus was during WWI, WWII and the economic downturns of the early fifties.
Last year, the retailer slashed its bonus, which it pays to all staff, to just five per cent of salary – the lowest level since the fifties.
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Yet, they’re not the only retailer cutting out bonsuses. Last year, Marks & Spencer reported that it would not pay any bonuses out to Directors.
In jobs board Indeed’s round up of 2018’s best employers, John Lewis came eighth.
Retail struggles
2018 was the year it all came to a head for the retail sector. Job losses from well-known high street chains were reported in the thousands.
By the end of summer 2018, Press Association said that 50,000 jobs were lost or imperilled.
Oliver Shah, Business Editor at The Sunday Times, said that since 2008 there retail sector has been a “savage” environment – citing a mixture of higher business rates, lower consumer confidence, a weaker pound, and less foot traffic.
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Other data showed that total sales growth for the high street dropped to zero.
Sir Mayfield added that the consumer demand and an “oversupply of physical space” were also affecting the sector.
Alternatives to the staff bonus
For business leaders and HR, bonuses can have a boost to employee morale.
According to research from One4allRewards.co.uk, HR bosses who gift their employees a bonus over the festive period are less likely to lose them in the new year.
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The study of 1,096 employees found that 58% of workers said that receiving a Christmas gift or bonus would deter them for looking for a new job.
Additionally, 57% said that they would be less likely to accept a job – if one had cropped up – after receiving a festive gift from their employer.
Yet, additional financial incentives aren’t the only way to boost employee morale.
A recent Glassdoor survey found that roughly four in five employees would prefer new or additional benefits to a basic pay increase – for younger workers the figure is even higher.
This take the form of bottomless annual leave, which Netflix dole out to staff, or taking a family-minded approach to dedicated employees.
For example, Google reward the surviving spouse of a deceased employee 50% of their salary for ten years after their death.
