As many businesses are forced to furlough staff or in the worst cases make redundancies, the remuneration of high earners has understandably come under the microscope.

Premier League footballers have attracted much of the public’s ire as clubs dither over salary cuts for millionaires while in some cases using government money to subsidise the wages of lower-paid non-playing staff.

By comparison, the scrutiny on other industry sectors has been less intense, but retailers shouldn’t believe their policies on executive pay during the coronavirus crisis will pass by unnoticed.

Thankfully, many have already taken positive steps. DFS, which has closed all of its showrooms, manufacturing and distribution operations, was among the first to announce that its senior leaders would reduce their pay while the shutdown continues.

“Retailers shouldn’t believe their policies on executive pay during the coronavirus crisis will pass by unnoticed”

Others have since followed suit. Arcadia’s senior leadership team and board have agreed to take salary cuts of between 25% and 50%, while group chief executive Ian Grabiner will receive no salary or benefits until the crisis is resolved.

Primark boss Paul Marchant, along with the boss of parent company ABF George Weston and its finance chief John Bason, have all asked for their base pay to be temporarily reduced by 50% during the pandemic, which has forced the closure of its entire store estate.

Primark has also created a fund to cover wages of factory workers in countries such as Bangladesh and Sri Lanka, where it has had to cancel orders, in a classy nod to the impacts being felt further down the supply chain.

Cutting costs

There are, of course, many other ways for inactive retailers to cut costs at this time by, for instance, slashing marketing spend or working with landlords to agree rent deferrals and improvements to payment schedules.

Cutting executive pay will not plug deep holes in balance sheets, but it does make reputational sense at a time when the media, and by extension the public, will use the remuneration of bosses relative to staff as a key measure of a business’ compassion.

Executive pay cuts are a no-brainer for retailers whose operations have either been halted or severely curtailed, but are they appropriate for those who continue to provide essential services?

Supermarket executives, for example, are working up to 20-hour days under the greatest of pressure to keep shelves stocked and staff safe. For these businesses, swingeing pay cuts to senior people could feel unjust.

“Executive pay cuts are a no-brainer for retailers whose operations have either been halted or severely curtailed, but are they appropriate for those who continue to provide essential services?”

A better approach, and one that appears to have been favoured, might be to reward lower-paid, frontline staff for the work they are doing under incredibly challenging circumstances while continuing to support the efforts of the leadership team.

Morrisons has said it will give frontline staff a bonus three times larger than normal for continuing to work during the coronavirus crisis.

Marks & Spencer, which has previously said it expects its food business to remain profitable throughout the crisis albeit without the big uplifts seen by the major grocers, is to award frontline store and supply chain staff a temporary 15% pay rise.

The situation businesses find themselves in is extraordinary, but it is also delicate. By managing issues of remuneration sensitively, retailers can help create the public goodwill they will need when we finally emerge from this crisis.

Content provided by Anthony Gregg Partnership.

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You can call Tony Gregg on 020 7316 3146 or email him at tony@anthonygregg.com.

Founded in 2003 and located in central London, Anthony Gregg Partnership specialises in the consumer search market space.