John Lewis Partnership has informed staff they face smaller pay rises under new proposals aimed to give the business greater “flexibility” during its turnaround.
The retailer, which also owns Waitrose, is understood to be consulting on changes to “reset” its current pay policy to help put the business on a more “sustainable” footing as it looks to reverse its losses, The Telegraph reported.
Under the proposals, senior leaders would be handed more power to control performance-linked pay rises.
The move, John Lewis warned, would mean a “smaller number” of staff were likely to qualify for the highest tier of salary increases in the future “because we’re resetting expectations”.
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John Lewis employs more than 76,000 workers across the Partnership.
Staff is currently one of the business’ biggest costs, with the retailer spending £1.8bn in its last full year on sales of £10.5bn.
Partner pay is raised by a set baseline each year and all employees can earn a bigger salary increase if they hit performance-linked targets.
However, under the proposals put forward, management are looking to insert an amendment saying performance-linked pay rises would be offered “unless there are exceptional circumstances where this should not apply”.
Another caveat suggests adopting the pay policy “unless there is a reasonable need not to, such as conserving resources”.
In a briefing to partners this month, staff were told: “Our aim is to reward exceptional contribution each year, but there may occasionally be years where we’re not able to – because it depends on how the Partnership is performing, critical investment we need to make and a variety of external factors.
“Our approach must be sustainable so contribution-related pay will likely be smaller than in the past.”
The changes to performance-related pay are separate to the Partnership bonus, which is awarded to all partners.
John Lewis staff council members are expected to discuss the proposals in the coming weeks ahead of a vote on them in March.
A John Lewis Partnership spokesman told The Telegraph: “As an employee-owned organisation, we put our partners first and remain committed to rewarding their hard work.
“We are simply being transparent with partners – creating a level playing field and setting clear expectations around what they need to do to achieve additional performance related pay.”
The change comes amid reports that chief executive Nish Kankiwala is set to present partners with an updated turnaround plan in the coming weeks after it faced a two-year setback due to “inflationary pressures”.
Last week, the Partnership revealed it had hired one of its former directors and ex-Jigsaw boss Peter Ruis to run its department store business.
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