John Lewis staff face smaller pay rises as business 'resets'

John Lewis has issued a warning that staff will face smaller pay rises under new proposals to reset salary policies and divert cash elsewhere as part of its turnaround plans.

Adding fuel to the fire, tensions between management and workers are increasing, according to The Telegraph.

The new proposed policy sees management take more power to control performance-linked pay rises under the proposals. Though management is currently led by Dame Sharon White, she is set to step down at the end of her current five-year term.

During a presentation, staff were informed that pay rises would be reserved for those who "consistently make an exceptional contribution to the business". As a result, "a smaller number of us will achieve this because we’re resetting expectations" and performance-linked pay rises would also "likely be smaller than in the past".

This announcement comes as the retailer struggles to turn around years of underperformance and boost revenues.

The company employs over 76,000 workers who are expected to be affected by the changes. Out of £10.5 billion in revenues, John Lewis spent £1.8 billion on staff in its last full year - making pay one of John Lewis’ largest costs.

Under the current constitution, all staff can earn a bigger salary uplift if they hit performance-linked targets. However, executives have the right to waive these performance-linked pay raises each year if the staff council agree, which they have done so for the last two years.

Under the new constitution, the need to first seek approval from the staff council would be waived in certain circumstances.

The John Lewis staff council is expected to discuss the changes in the coming weeks. They will vote on them in March.

A spokesperson for the  John Lewis Partnership 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."

This comes just weeks before the newly appointed Chief Executive, Nish Kankiwala, is set to present John Lewis partners with a fuller turnaround plan. The updated strategy will centre around four pillars — "Distinctively Us, The Partner Difference, Simple and Productive, and Fix the Basics" — which are meant to improve interactions with customers, simplify the partnership and increase productivity.