Qantas staff get up to $3k bonus after record profit
Qantas is handing out cash bonuses to its staff, following a record profit result. And it is not alone. Health supplements company Blackmores is paying its staff a bonus of almost nine weeks' pay.
Qantas announced it will pay around 25,000 staff a cash bonus, after announcing a record profit of more than AU$1 billion.
It is a massive turnaround for Qantas, which two years ago recorded a loss of AUS$2.8 billion (NZ$2.91 billion).
Full-time staff will receive up to AU$3000 (NZ$3123) each. Part-time staff will receive up to AU$2500 NZ$2602.
The bonuses are being paid to workers who had agreed to an 18-month pay freeze, as part of a restructuring of the company.
The restructure involved the axing of unprofitable routes and the loss of around 2000 jobs.
This year's bonus payments will cost Qantas around AUS$75 million (NZ$78 million). That compares to around AUS$134 million (NZ$139 million) that will be paid in dividends to shareholders (the first dividend payment since 2009). Another AUS$366 million (NZ$381 million) will be spent buying back shares from investors.
Like many other chief executives, Qantas boss Alan Joyce will be paid a bonus. Last year he was paid AUS$11.8 million (NZ$12.2 million), in base pay and incentive payments.
Vitamins company Blackmores also announced a cash bonus for its staff, after announcing a profit of AUS$100 million (NZ$104 million).
Staff will receive the equivalent of almost nine weeks' pay. That follows a bonus payment of six weeks' pay last year.
The company has a profit share scheme for its employees, who receive ten percent of the profits.
Chief executive Christine Holgate has told staff to "make the most of it" as the company's rapid sales in Australia and Asia are starting to slow.
The slowdown is why the company's share price fell 19 percent yesterday. It is still four times higher than it was two years ago.
Christine Holgate also gets a bonus. Her total pay will rise to AUS$1.95 million (NZ$2 million) thanks largely to a near doubling of her bonus payments.
The bonus payments by Qantas and Blackmores were announced in the same week that two high profile British investment fund managers said they were doing away with bonuses for their staff.
Neil Woodford is putting all his staff on a flat salary, arguing that the bonuses paid to many in the financial services sector are "largely ineffective" and can lead to short term behaviour.
He is concerned the bonuses do not motivate staff. Rather they can become taken for granted. Even worse, he thinks that in some cases the bonuses can encourage short-term decision making that is not in the long-term interests of shareholders.
The bonuses paid in the financial services sector do differ from those being paid by Qantas and Blackmores.
Qantas and Blackmores are paying bonuses at a standardised rate, whereas in the City of London and on Wall Street the payments can vary widely between staff.
Neil Woodford's decision has won support from another fund manager, Daniel Godfrey, who says he is not going to offer bonuses at his new firm.
Some studies say bonuses do little to improve employee satisfaction and performance.
Researchers argue that non-cash rewards have more impact. This could include educational opportunities, gifts (like fitness trackers), or even trips.
Last year the bosses at Auckland restaurant Coco's Cantina gave their staff a trip to Italy to learn more about the country's culture and cuisine.