The payouts that give bonuses a good name will be revealed Thursday morning, when the John Lewis Partnership announces its annual results.
To the usual cheers from employees gathered at the group’s flagship Oxford Street store, chief executive Andy Street will reveal the proportion of profits that will be paid out in bonuses this year.
The retailer, which is effectively owned by its employees, first started paying bonuses to staff – or partners as they are known – in 1920. They were set then at 15 per cent of salary and received by everyone from the cashiers to the chairman.
At their peak, bonuses reached 24 per cent, paid out in 1979, 1987 and 1988. The lowest-ever payout was 4 per cent in 1954, but there were also a number of years, during the war and various recessions, that payments were suspended altogether.
Things will be better than that this year but there may be some disappointment among the group’s 90,000 or so employees, as the payment is likely to be lower for the second year in a row.
Last year they were awarded 15 per cent of their salaries in bonuses – the equivalent of about two months pay – a reduction from the 17 per cent payout the previous year.
This year, the bonus is expected to come down further, to between 10 per cent and 14 per cent, according to analysts.
Profit fall
That reflects a fall in profits at the group, particularly in its food retail arm. Its upmarket supermarkets chain,
Waitrose
, has consistently outperformed the market but is suffering from the fierce food price war.
Group costs are also being driven higher by the increasing push online.
Retail analyst Nick Bubb is forecasting an 8 per cent fall in pre-exceptional profits to around £350 million, reflecting a 20 per cent slump in operating profits at Waitrose.
Bubb makes the point that nearly all John Lewis’s sales growth came from online, which brings with it extra fulfilment costs, particularly at peak times such as the frenzy of buying experienced by the group, along with other retailers, on Black Friday last autumn.
Traditional reputation
The growth of the online operation is also making it harder for the group to live up to its traditional reputation for good customer service. Complaints among its loyal army of middle class customers have been growing in recent months, with tales of botched deliveries and washing machines and other goods dumped in gardens.
The City is an unforgiving place but Tidjane Thiam is living proof that sometimes it's worth giving someone a second chance.
Widely acknowledged as one of the most impressive chief executives of his generation, Thiam (52) has worked wonders at the Prudential. During his 5½ years running the FTSE 100 insurer, its profits have doubled and its share price tripled.
Shareholders are extremely happy with their investment, which is why the shares fell yesterday after confirmation of his departure to Credit Suisse later this year. Yet those same investors were baying for his blood in 2010 when the Pru's ambitious $36 billion bid for the Asian life insurer AIA collapsed.
The abortive takeover cost the Pru several hundred million pounds and a huge loss of reputation.
In the end it was chairman Harvey McGrath who paid the price and lost his job. Thiam, although heavily criticised for the way he had handled the deal, was allowed to stay on.
The City’s faith in him has been well rewarded. And investors in scandal-hit Credit Suisse applauded news of his appointment by marking the Swiss banking group’s shares sharply higher.
Thiam has no banking experience but will bring a unique set of skills to his new employer: earlier on in his career he served as a government minister in his home nation of Ivory Coast, surviving a military coup there.
As his time as the top man from the Pru demonstrates, Thiam is as capable of dealing with failure as he is with success.
Fiona Walsh is business editor of theguardian.com
