Levi's pounds 500m bonus aims to keep staff riveted with joy

Workers at Levis Strauss could have been forgiven for fearing the worst for their jobs when they were summoned yesterday to hear a message from the company's world-wide boss.

In today's never-ending pursuit of business efficiency even the jeans and leisure wear industry might not be immune to a dose of "downsizing".

But instead, at 2pm yesterday, Bob Haas surprised his 1,600 employees in the United Kingdom with a "wonderful plan" to reward them. Speaking from San Francisco via a pre-recorded video to staff in Scotland and Northampton, he revealed his revolutionary vision: to pay each of them a bonus of a year's salary.

Staff at first were nonplussed "At first I thought `why?'" said warehouse packer Dave Sangster, an employee for only six months who stands to gain pounds 11,000. "But then I realised there was no catch. I'm pretty chuffed."

The plan, which flies in the face of downsizing and talk of leaner and fitter workplaces, involves all 37,000 permanent staff world-wide receiving the bonus at the end of 2001. The only qualifications for the millennium package are that employees have to work for at least three years from now and that the jeans company reaches its goal of a $7.6bn (pounds 5bn) cashflow.

The payment is based on salaries on 17 April this year and those who leave after three years will still be paid a pro-rata amount of the bonus. If the target is exceeded they could earn even more.

At the company's distribution centre at Moulton Park, near Northampton, a 60ft marquee was erected for the announcement, and the 190 workers were treated to jugglers, mime artists and a jazz band.

The scheme, thought to be the first of its kind in the world, is regarded as a reward for hard work and an incentive for more profitability in the future. Janie Ligon, Levi's UK general manager, said: "Motivated employees are our source of innovation and competitive advantage. We are not a charity. If we achieve our target then we will be more profitable and will share in this with our employees."

The pounds 500m cash bonus is the latest in a series of steps taken by Mr Haas, the chief executive, in his efforts to transform his family company. The great-great-grand-nephew of the Bavarian immigrant who founded the company, took over in 1984, when the glory period of the Seventies had come to an end. Recession, the baby-boom generation's lack of interest in traditional jeans and the advent of low-cost competitors had put the management in a quandary.

Though the bonus scheme is evidence of Mr Haas's commitment to employees, it was not always that way. Between 1984 and 1990 the company reduced the number of product lines by two-thirds and between 1981 and 1986 shed 17,000 people on the back of shutting 59 factories and service facilities.

But this trimming of operations and of the hierarchy has given the organisation a focus that Mr Haas and his executives have built on since taking the company private via a leveraged buyout in 1985. It has performed so strongly since then that the debt has been paid back and the organisation valued at $13bn. World-wide sales last year were $6.7bn.

At a time when many organisations set out visions, Mr Haas has fought to make the company live up to the ideals set out in its "aspiration statement". Specifically, its leaders must abide by high ethical standards, value diversity in age, sex and race; and push responsibility down the organisation.

Financial analyst Shirley Hill, 40, who has been with the firm for 13 years and who will pick up a bonus of pounds 22,000, said the news did not come as a huge surprise. "It's the sort of thing you almost come to expect from Levi's. It's a good feeling to be wanted by a company."

Reaction was equally positive in the three Scottish manufacturing plants in Bellshill, Dundee and Whitburn. Des Farrell, national officer of the GMB general union, said: "It is great news for the workers and can only help the success of this company. Levi Strauss have taken a giant leap into the next millennium by rewarding their workers."