John Lewis staff bag a bumper bonus

I’m going to have to keep this blog entry secret from my team at tutor2u.  News that staff at John Lewis are each to receive a 20% bonus certainly focuses the mind on how to use pay as a method of remuneration.

It takes a pretty special business to pay such a special bonus.

The newspapers this morning provide plenty of details about the announcement from John Lewis that it was making its biggest profit-share since 1998.  Staff at John Lewis will get a 20% bonus, equivalent to 10 weeks pay.  The bonus pot is £180 million!

The Independent has a really useful background article this morning explaining how and why the bonus is being paid.

The crucial part of this news story is the ownership structure of John Lewis.  When the business was formed, staff (or partners as they are known) were given joint ownership of the company. That’s why they reap a slice of the profits each year.

There is plenty in the Independent article that would form a useful lesson piece. In particular, the story can be used to examine the link between financial methods of reward, employee motivation and the performance of a business.

Of course, a partnership by definition shares its profits amongst the partners.  It is much more difficult for a limited company to make bonus payments like this.

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