“The real heroes”: Why Kathmandu is paying 1,800 employees $1,000 bonuses this year

Permanent staff at outdoor retailer Kathmandu will receive a $1,000 bonus from their employer in the lead up to Christmas this year after the business posted a record full-year profit earlier this week.

Kathmandu, which has more than 150 stores in Australia and New Zealand, will pay out about $1.8 million under the scheme, benefitting 1,800 workers, the majority of which are in-store and warehouse staff.

It comes after the business posted a record $NZD 50.5 million ($46.2 million) after-tax profit for the financial year ended 31 July, an increase of 32.9% on the prior year.

Chief financial officer Reuben Casey says the bonuses reflect the company’s desire to share its success with all of its stakeholders.

“We’ve had two-three years of really good performance and this year has been exceptional,” he tells SmartCompany.

“The real heroes of our business are the ones serving our customers … and we want everyone to share in our success.”

Kathmandu has gone from strength to strength in recent years, bucking the trend in a subdued discretionary retail environment by booking sales growth of 11.7% for financial year 17-18.

Casey says the bonuses also reflect Kathmandu’s desire to boost staff motivation and retention, agreeing the decision will help it stand out as an employer of choice in the retail industry.

“Staff are delighted,” he explains, “it’s really consistent with our Kathmandu values.”

A ‘powerful’ incentive for Kathmandu workers

HR expert David Simpson, who is managing director of consultancy Melbourne HR, says financially significant bonuses can be a powerful way to reward and incentivise staff.

“Bonus structures can be designed to incentivise people or reward people, and there’s an interplay there,” he tells SmartCompany.

“But there’s that other aspect … we hear in the media all the time about chief executive officers or investment bankers getting all these bonuses, so there’s this other part of it that’s sharing the success of the company with their employees.”

Peter Wilson, chairman of the Australian Human Resources Institute, believes there’s scope for more companies to take up Kathmandu’s example, particularly in the retail sector.

“The rationale is simple: in this global and digital world of retail, the power is with the customer, and they’re the people in the organisation doing the service,” he tells SmartCompany.

“People [who work in retail] think ‘its not just the top guns that do well … having performance assessed relates to us too’.”

Simpson agrees employers more broadly could benefit from considering financially significant bonuses as a mechanism to motivate or reward staff, but there are some potential pitfalls.

While he says paying in cash, rather than other rewards, provides employees with freedom, it can also backfire.

“Some small businesses like to take people away … those are fantastic ideas, but you are presuming a preference set,” Simpson says.

“When it comes to bonuses cash is the way to go … [but] if it isn’t a large amount of money you might want to think about movie tickets.

“If it’s too little it might look too small and you’d get bigger bang with a staff party or something smaller throughout the year.”

As for Kathmandu, Casey says they’ve made it clear the 2018 bonuses are a one-off.

“There’s no intention to do it every year, but having said that if we have a great year in the future we wouldn’t rule out doing it again,” he explains.

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