Asda Axing Bonus Payouts For Managers

Asda is reported to have told thousands of senior staff they will not receive their bonuses after a year of declining sales and market share.

According to The Telegraph, more than 10,000 managers have been told that they will not be rewarded with payouts owing to the supermarket’s faltering performance. Typically, managers expect to receive bonuses in the first three months of each year.

The newspaper noted that the bonuses are being axed just months after Allan Leighton returned to the retailer as Chairman, pledging to restore what he calls the “Asda DNA”.

The Telegraph stated that while slashing the bonuses could help fund price cuts that are part of Leighton’s turnaround plan, it is likely to hit already low morale on the shop floor.

A former senior Asda employee said: “Morale will be rock bottom. Even Allan won’t be able to pick them up from this. This will mean some of the top talent looking elsewhere.”

Fewer than half of workers said they were confident in Asda’s strategy in the supermarket’s most recent staff survey. It has also recently faced criticism from union chiefs over how it was making job cuts at its head office without forewarning.

One recruiter told the newspaper that the move on bonuses could lead to “anarchy” within the company. Senior managers are eligible for Asda’s bonus scheme and around 10% of its 134,500 employees received the award last year.

News that they will miss out this year comes just weeks after Leighton unveiled his first round of job cuts as part of a restructuring of its senior teams.

Leighton has warned that it could take as long as five years to revive the supermarket.

Clive Black, an analyst at Shore Capital, noted the new Chairman had injected “new energy”, but said what Asda needed was “a proper overhaul of the group’s engine, not just a 12-month service”.

Leighton is also under pressure to improve performance at a time of looming cost increases across the industry. Black said: “Costs are about to go a whole lot higher, with EPR [Extended Producer Responsibility scheme, a recycling levy], National Insurance and the National Living Wage.”

NamNews Implications:

• Morale impact:
• Good guys leave
• And those that cannot…
• And with the big cost increases yet to hit…
• i.e. EPR, National Insurance, National Living Wage
• (Meanwhile, the good guys apply to Aldi/Lidl?)