Question

Wilson’s is a small chain of low-cost retailers based across Scotland and the North of England. It has no stores in London. It has 30 outlets, typically medium-sized shops (around 10,000 square feet) selling low cost items such as household products, cleaning products, and general homewares. Its main competitor is the larger chain of B&M stores. The brand was established 15 years ago, just before the financial crisis by an entrepreneur, Mr Khan. The Khan family still own and run the firm and have managed its successful expansion from the headquarters in Glasgow.

The headquarters has the following staff:

• An Executive Team headed by Mr Khan who oversee the strategic direction of the company. The Executive Team comprise of : Mr Khan as Chief Executive, a Chief Finance Officer who has been hired from a local competitor retailer, a Chief Marketing Officer and Chief Buying Officer. There is also a Chief Logistics Officer who oversees the warehouse and distribution network. Each function has a small team of expert staff based in the headquarters and the CLO oversees the warehouse staff (based near Carlisle) and distribution staff who drive lorries and who are based at the Carlisle warehouse.
• You have just been recruited as the Chief People Officer to help the company professionalise its HR policies and practices. You have taken over from a good predecessor, who has moved on to a new role in a different, larger company. You have a small team of 2 members of staff to assist you, but they are very junior and have relatively little HR experience.

Each store has a Manager and Deputy Manager and approximately 80 staff, most working on flexible part-time contracts which can be flexed to accommodate leave and staff turnover. Core team members are paid just above the National Living Wage, although approximately 1 in 10 are supervisors who have additional responsibilities such as handling cash, dealing with customer complaints, and managing the allocation of tasks to team members during shifts.

Stores are staffed very flexibly. They open between 8am and 6pm, 6 days per week and between 9am and 4pm on Sundays. All stores must have a Manager or Deputy Manager present on site at all times during opening hours because of health and safety regulations. Other staff are scheduled depending on their availability and, where feasible, preferences.The typical pay structure of a store is:

1 x Manager: £30,000 to £40,000 per annum depending on the size of store. Few opportunities for progression. No fixed hours. Contracted for 40 hours per week, but expected to work as needed – often up to 50 hours per week.

1 x Deputy Manager: £25,000 per annum. Some opportunity for progression but depends on expansion or managers leaving. No fixed hours. Contracted for 40 hours but expected to work as needed. Rarely work 50 hours unless illness or manager’s holidays require. 45-48 hours per week is more common.

8 x Supervisors: £10 per hour worked. Most on 15 hour contracts but expected to work flexibility and recruited for their ability to do so. Most work longer than 15 hours and some work up to 35 hours per week as required. At least one supervisor is needed for all store opening hours.

70 x Team members. Most on 10 hour contracts although many work up to 35 hours per week as required. In line with UK law, pay rates vary by age:

• Aged over 25: £8 per hour worked. 60% of team members.
• Aged 21-24: £7.50 per hour worked. 25% of team members.
• Aged 18-20: £6 per hour worked. 10% of team members.
• Under 18: £4.50 per hour worked. 5% of team members.

The UK has laws setting the minimum legal hourly rate that workers in all industries can be paid. This is called the National Living Wage. The UK government announced in 2018 that the National Living Wage will increase.Details can be found here. A summary of changes is below.

YEAR	25 AND OVER	21 TO 24	18 TO 20	UNDER 18	APPRENTICE
2019	£8.21	£7.70	£6.15	£4.35	£3.90
2018	£7.83	£7.38	£5.90	£4.20	£3.70

• What options are there for dealing with supervisors’ rates of pay? What are the pros and cons of retaining the pay differentials in line with the team members’ pay rise?

Answer 1

As described in the New laws

The wages for the supervisors need to be increased by as below:

Aged over 25 : £8.5 per hour worked. 60% of team members.

Aged 21-24: £8 per hour worked. 25% of team members.

Aged 18-20: £6.5 per hour worked. 10% of team members.

Under 18: £4.50 per hour worked. 5% of team members.

This should be done keeping the below points as mentioned:

15 hour contracts but expected to work flexibility and recruited for their ability to do so. Most work longer than 15 hours and some work up to 35 hours per week as required.

The advantages in retaining the pay differentials in line with the team members pay rise:

1. Worker motivation: The reasons why an employee remains in his or her job are often complex. Many individuals derive significant satisfaction from work that they find meaningful. However, workers are also significantly, if not primarily, motivated by financial concerns. If a worker knows that meeting performance objectives will result in a compensation increase, they may be inclined to work harder and improve their skills.

2. Retaining top talent: You can expect that your top talent will be approached by other employers. If you want to keep exceptional employees, you must offer them a competitive compensation package. When your best employees know that they will be rewarded for their efforts, they are more likely to stay with your company.

The disadvantages in retaining the pay differentials in line with the team members pay rise:

Not everyone is enamored with pay-for-performance compensation increases, however. Some analysts are skeptical that it is an effective way of motivating employees and retaining good workers. The primary disadvantages cited are:

1. Performance measurement is often subjective: The work of some employees can be easily quantified and measured. For example, a salesperson may be asked to meet specific sales numbers for the year. However, many workers, particularly those in administrative roles, perform vital functions, but their work isn't defined by achieving specific goals. For these employees, a pay-for-performance plan could prove frustrating, in large part because their evaluations are more subjective. A personality conflict with a supervisor could, in some cases, result in lower compensation.
2. Performance reviews are falling out of favor: The pay-for-performance model often hinges on the results of an employee's annual performance review. However, many employers are finding such reviews ineffective, and are abandoning them in favor of encouraging managers to provide feedback to employees throughout the year.