Tesco is promising to reward staff with a one-off “turnaround bonus” worth up to 5% of their salary if they hit sales and profit targets this year.
The potential payout in shares that staff would be able to cash in immediately is part of chief executive Dave Lewis’s effort to get Britain’s biggest retailer back on track after a slump in profits and sales as well as an accounting scandal which led to a profits mis-statement of more than £263m.
Tesco is attempting to fight back against fast-expanding discount chains Aldi and Lidl at the same time as it deals with a slump in food commodity prices and changing shopper habits, with sales shifting away from large supermarkets and towards the internet and small local shops.
Staff from checkout operators to managers were offered the turnaround bonus by Lewis in January as part of a new deal that included renegotiating pension arrangements.
He is battling to improve morale after cutting nearly 5,000 head office and UK store management jobs as well as more than 4,000 roles overseas and at the group’s banking division.
The company released details of the turnaround bonus on Friday, after negotiations with shopworkers’ union Usdaw. Tesco is still in talks over further details of a new pay deal for employees, which it has said will involve giving more flexibility on benefits such as a staff discount.
At Tesco’s annual shareholder meeting last month, Lewis told low pay campaigners that the supermarket was looking at ways to increase basic pay, but that might be at the expense of other benefits. He said Tesco would not increase the total amount it spent on pay and benefits this year.
The turnaround bonus will not replace the existing Shares in Success bonus scheme, which is a discretionary payout for all staff agreed by the board of directors every year. This year, the scheme paid out 1% of salary up to a maximum of £1,000 but in previous years it has paid out three times that amount or more.
Tesco said no decision had been made on the coming year’s Shares in Success scheme but any changes would be made in consultation with the union.
The supermarket is reviewing almost all aspects of its business as it tries to get back on track. On Friday it emerged it had written to more than 600 dairy farmers saying it would be re-examining a deal under which it agrees to pay an independently verified price which at least covers the cost of production.
Tesco said the scheme had been in place for eight years and so needed to be reviewed to take into account changes in the market. However, it committed to maintaining an independent price check and maintaining a sustainable deal for farmers.
“We will be carrying out a collaborative review with our sustainable dairy group members to allow us to adapt to the significant changes we’ve seen in the dairy industry over recent years and ensure the [deal] remains sustainable for the future,” said a company spokesperson.
Rob Harrison, chair of the NFU’s dairy board, said: “While we all can agree that the UK dairy industry has changed immensely in the last eight years, this decision will obviously cause worry and concern to those affected.”
This article was written by Sarah Butler, for theguardian.com on Friday 10th July 2015 19.12 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010