You are Elena Vidal, Compensation Manager at Verdeluz Retail Group, a Valencia retailer with 140 stores and 3,200 people. A leaked spreadsheet and a run of resignations have arrived in the same week, and the board has capped payroll growth at 3%. Before the April pay review you must decide which claim on that money comes first.
The situation
Verdeluz sells through 140 stores and a growing online and logistics arm: €540 million of revenue at a 5% net margin, with a payroll of €168 million a year. Its people fall into three groups that want different things. The 2,200 frontline and warehouse staff, hourly and quick to turn over, value secure base pay and benefits. The 760 specialists in buying, marketing, data and supply chain are priced by the market and the easiest to poach. The 240 store, regional and central managers expect variable pay that reflects results.
On 20 January two messages landed within the hour. One was a spreadsheet, already circulating with the warehouse shift schedule, showing two distribution centres paying up to 14% differently for identical work; the works council calls it grounds for a formal grievance. The other was the third resignation in a fortnight from the data team, for an offer 22% above base. Specialists sit about 10% below the market median, and each one who leaves costs about €48,000 to replace and bring up to speed. Meanwhile managers' variable pay is 8% of their total pay, against 18–22% across the sector, and a strong store manager's bonus lands within a few points of a weak one's.
The board froze payroll growth at 3%: €5.04 million for the year. Meeting all three groups' claims in full would cost about €8.3 million, so the envelope covers roughly 60% of them. Closing the warehouse gap in full would take about 40% of it on its own. You recommended standardising pay in 2023 and the recommendation went nowhere. And your own bonus depends partly on keeping payroll inside the cap.