Royal Mail to scrap bonus scheme

ROYAL Mail is scrapping its controversial bonus scheme for executives following massive criticism after it failed to meet all of its service quality targets.

But they have a replacement scheme lined up that is likely to net big rewards.

The original scheme awarded five top executives a combined £1.5m last year and was designed to reward directors for boosting profits.

Eighty% of the bonus was for achieving financial targets and only 20% offered for meeting quality targets.

Financial Mail understands that the company will introduce a new scheme next March, changing the balance to a 50/50 split of quality and financial targets.

The new bonus is unlikely to be too onerous for directors, however-Royal Mail is on target for profits of £400m next year and senior sources have told Financial Mail that when new service quality statistics are announced in December they will show that four of the key targets are already being met, albeit by a narrow margin.

After an appalling early summer period that saw all quality targets missed, standards are at last starting to improve.

The key target is to get 92% of first class mail arriving at its destination the following day. In April it had reached only 88%.

An important tactic of management is to try to isolate areas where the service is poor because of alleged union militancy. Royal Mail is convinced that there is a direct link between union militancy and poor service.

It points to Oxford, the scene of recent industrial action, as an example. Only 68% of first class mail arrives on time in the area.

However, management remains fearful that a crackdown on militant areas might trigger wildcat strikes and significantly hamper the attempt to hit service goals.

If targets are not met, chief executive Adam Crozier will be in the firing line. He took responsibility for mail delivery after a boardroom shake-up in May.

Crozier insists that the postal service, which has seen 30,000 redundancies in the past three years, is near the end of a fundamental reorganisation.