Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Solving the morale dilemma

In what was arguably the most hotly anticipated Christmas trading update to the City last week, Marks & Spencer chief executive Stuart Rose conceded there was a chance that staff bonus targets would not be reached.

With this year shaping up to be one of the most challenging trading climates of the past decade, retail bosses will need to incentivise employees if they are to hold on to staff and maintain morale in difficult times.

As Rose pointed out, it has been almost 10 years since the UK has experienced a consumer slowdown, meaning many of today’s retail bosses are not used to working in such a climate. “In terms of bonus, this time last year we were well ahead of our internal forecast,” said Rose at the press conference. “This year you don’t have to be a genius to work out that we are not so far ahead. Still, we have the last quarter to run. We will wait until we have the knowledge before saying whether we will be able to give a bonus.”

Last year, M&S paid out £91 million in bonuses to 72,000 employees including shop floor and head office staff. But retail guru and former Next chief executive David Jones says employees are now used to having a bonus scheme and consider it part of their salary. “Over the past six years people have earned big bonuses, so you can’t immediately change the rules,” he warns. “Staff on the shop floor, for example, have come to rely on their bonus to get a reasonable wage. They work hard and they need to be looked after. So in the current difficult trading climate, management needs to readjust the bonus scheme so that staff still get something, rather than nothing at all.”

Jones adds that bonus schemes may need to be downgraded and made more realistic, with more communication between management and staff key to keep up morale.

Former Speciality Retail Group and Moss Bros chief executive Adrian Wright agrees. “Management should never set bonus targets it can’t reach,” he explains. “The worrying thing about the M&S situation is that I’m sure many of its staff have already spent the bonus they may well not receive.”

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.