BT managers to get below-average to cut costs

BT plans to pay its executives less than the industry average, it emerged today, relying instead on performance-related bonuses to try to motivate managers to improve the company's results.

The policy makes BT the first major British company to break the mould of paying its senior managers in line with the industry average and follows an offer to its staff to take up to a year's holiday on quarter-pay.

The company is trying to slash costs while improving its performance as it battles with a cash squeeze caused by the failure of its global IT business and a mammoth pension deficit.

BT is looking to cut 15,000 jobs this year on top of the 15,000 which have gone over the past 12 months. The company, the UK's ninth largest employer, has 147,000 workers, 42,000 of whom are contractors who have already seen their pay drop by an average of 14%.

Chief executive Ian Livingston has said the company wants to avoid making compulsory redundancies and as a result it has been looking at innovative ways of reducing its wage bill.

The company is offering staff a series of what it terms "Time Out Options" including the opportunity to take up to a year off work in return for a 75% pay cut. Staff accepting the offer will be paid their remaining 25% salary upfront, allowing them to use it for anything from extended travel to study leave. Parents have been given the option of working only during term time, while BT is also offering £1,000 in cash to workers who are willing to move from full-time to part-time employment.

BT hopes to avoid the sort of unrest seen at other companies such as Shell and Provident Financial by amending its remuneration policy so that "base salaries are typically positioned at levels below the median of the comparator group". Instead executives will get bonuses - in cash and shares - but "only for sustained and excellent performance", according to its annual report.

Source: The Guardian, 6th July, 2009

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