Sports Direct revolutionises staff share schemes with £100k windfall

The John Lewis model ought now to be renamed the Sports Direct model.  The budget retailer owned by Mike Ashley has revolutionised employee ownership schemes by handing its shopfloor staff close to £100,000 after the value of its shares soared.

The John Lewis mutual partnership was previously held up as a the zenith of progressive business models, where profits were shared among staff, albeit very unevenly.

Staff – or ‘Partners’ – at the department store usually receive between 9% and 20% of their annual salary, which is considerably more than staff at other retailers receive on top of their pay and not to be sniffed at.  A John Lewis checkout assistant on £20,000 could earn an extra £5,000 a year, compared with zero at most other retailers, where bonuses are usually only awarded to executives and senior management.

But Sports Direct’s share scheme has resulted in life-changing amounts of money being handed to staff. Owner Mike Ashley and CEO Dave Forsey say tying the company’s performance to bonuses for permanent staff ‘glues’ the company together.  Employees are incentivised to stay at the company, and are rewarded when the company makes money, and huge amounts at that.

Since the company awarded its bonuses in shares, many may choose not to cash them in just yet, as the company continues to expand. It is expected to enter the FTSE 100 soon.  But for those who do wish to cash out the shares, Ashley has provided a free stockbrokers’ service to help them convert their shares to money.

Ironically, the windfall for some of the staff is so large they could now leave the company, undoing some of the ‘glue’ which held it together.  But with news of £100,000 bonuses, it’s not as though there will be a shortage of people willing to become loyal employees.