Faced with increasing dissatisfaction by retail store employees over pay rates, and banking an embarrassment of cash and store revenues, Apple has granted substantial pay raises for store employees, in some cases up to 25 percent. The one-time pay hikes coincide with routine, annual performance-based pay raises that are being granted three months earlier than usual, and which range from five percent to eight percent of an employee’s pay. The new pay rates provide additional income for the store workers, but do not put them beyond the range of others in the retail industry, who are typically classified as middle-income workers. The raises may help to settle grumbling by workers that began at least two years ago, at about the time Apple’s revenues, profit and cash holdings began to draw investor admiration. Despite that increased success and riches, store employees felt they weren’t being rewarded for their work to make Apple a runaway success. Instead, they were being paid at rates basically established in 2001 when the chain was founded.
While an hourly wage is not the only compensation that Apple store employees receive, it’s the the most commonly-used benchmark of worker reward. Apple provides other benefits, including a health insurance package for full-time and some part-time employees. The company has the usual vacation and sick leave programs, and offers a charitable donation matching program. Employees, their family and friends can purchase Apple products at a discount, and the company reportedly just extended the Employee Purchase Program (EPP) to include extra discounts on Macs and iPads.
When the retail stores marked their 10th anniversary in May 2011, the company’s financial success became more clear, and that the retail stores were a major contributor to that success. Over the last five years, the stores have contributed from 12 percent to 20 percent of the company’s quarterly revenues, and from 10 percent to 33 percent of its quarterly profits. Those figures resonated with the retail store employees, who wondered if they deserved more rewards. Their questions about pay eventually found their way to Apple’s executives.
Apple continuously surveys its employees on-line as part of its NetPromoter evaluation process. The same survey process is used to survey customers who have purchased a product at the retail stores. A key question in both surveys is whether the taker would recommend Apple to a friend or family member. When the stores first opened, Apple’s NetPromoter score for customers was reportedly 42. Now, however, the score consistently hovers around 70 for customers, but it’s unknown what the employee score is.
Another section of the internal employee survey asks for free-text feedback, which is where Apple has reportedly been receiving complaints about pay rates. The survey also asks employees about the effectiveness of various forms of recognition the company gives employees.
Meanwhile, over the past four years Apple has continued to accumulate a huge amount of cash holdings, and at an increased rate (chart below). The company’s executives, including Steve Jobs while he was still CEO, repeatedly answered stockholder questions about the cash, but said, “It’s not burning a hole in our pocket.” But last March the company finally relented, and announced a stock dividend and repurchase program that would pay out about $45 billion over three years. However, the program didn’t answer retail employee complaints that they weren’t being rewarded for the company’s success.
The chain’s original Sr. VP of the retail stores, Ron Johnson, left the company last November, and Apple hired John Browett of the UK-based Dixons electronics chain to replace him. Browett took the full reigns of the stores last April, and inherited the employee dissatisfaction over pay. He has written email letters to the employees at least twice, but made no mention of pay in either message. Finally, last week word leaked out publicly that annual raises would be given early and that a one-time raise would also be included.
Those pay raises were announced to employees over the past week during individual meetings with managers. The exact amounts of the annual performance pay raise and the one-time hike were not disclosed to the employees. Instead, the employees were simply told what their new rate of pay will be, without any percentage mentioned. According to sources, the performance increase was in the usual range of five percent to eight percent, and the one-time increase was in the 10 percent to 15 percent range.
Pay rates for each retail store job position are entirely secret, even to Apple’s retail workers, and can vary by a manager’s discretion within a certain range for employees seemingly in the same job situation.
Store employee Cory Moll heads the Apple Retail Workers Union (ARWU), dedicated to improving working conditions within the chain. He’s a 4½-year employee who nows works as a Specialist in the “red zone” of a store selling products. He has publicly posted that his pay went from $14.49 per hour to $17.31, or about a 19.5 percent increase.
But beyond Moll’s public posting, a list of retail store pay rates is scarce. In 2004 the now-defunct Web site ThinkSecret posted a complete list that shows Apple had four compensation plans, corresponding to the cost of living in various markets where the stores were located. Plan 3 was considered “average,” and and the other three compensation plans were percentages above or below those pay rates.
For example, Plan 4 was for smaller markets, and its pay rates were set 7.5 percent lower than Plan 3. Plan 2 was for mid-sized markets, and was set eight percent higher. Lastly, Plan 1 was for the largest markets, and was set at 12 percent higher than Plan 3.
Many of the job positions have changed since 2004, but in general, a Specialist back then was receiving from $6.00 an hour in the smallest markets, up to $7.20 an hour in the largest. The federal minimum wage at the time was $5.15 per hour. Download (pdf) the original 2004 pay rate table for more information.
According to the U.S. Bureau of Labor Statistics, the average hourly wage for full-time retail sales personnel in the United States is $12.08.
Update: On June 30th the Apple Retail Workers Union posted the results of an on-line survey about the raise:
- Red Zone Specialists reported on average a 28% raise, or about $2.89.
- Back of House Specialists reported 22.5% average, or about $2.44.
- Family Room Specialists reported 19.4% average, or about $2.86.
- Genii reported 15% average, or about $2.41.
- Creatives reported 9% average, or about $1.51.
- Experts reported 12.6% average, or about $1.98.