Laing O'Rourke plans to scrap staff bonus scheme

Top Laing O’Rourke staff are angry that the group’s attractive bonus scheme will reportedly be scrapped from next year.

When O’Rourke first bought Laing Construction seven years ago, all staff were offered a bonus scheme that enabled the group’s top names to add as much as 50% to their basic salary.

The proportion of staff enjoying bonus benefits was trimmed back in recent years until only directors and project leaders were left in line for salary enhancements.

News of the plan to scrap the scheme completely came as O’Rourke bosses were already reportedly frustrated that the bonus they were expecting this year, on the back of the group’s record £45m pre-tax profit last year (see box), failed to materialise.

A source said: “The reason given was that they didn’t hit targets.” They added that the news may have prompted several departures at managerial level in recent months.

But one recruiter contacted by CJ played down suggestions that staff would leave as a result, describing O’Rourke as “in the top 5% of payers in the London and South East region.” He said there was a steady stream of recruits going in as a result of its expansion.

When Laing O’Rourke published its latest set of annual results (12 months to 31 March 2007) turnover had broken through the £3bn barrier for the first time. The previous year’s figure was £2.3bn. If bonuses were simply turnover-based it might have been reasonable to expect that performance to have triggered the incentive payment.

And with the previous year’s profit of £34m, the latest figure of £45m reportedly led senior figures to believe a bonus was due.

Laing O’Rourke declined to comment.

Laing O’Rourke is reported to be looking for an investor to take a 50% stake in the group’s construction division.

Thanks to a £45m pre-tax profit figure last year, the market value of the group’s construction business has multiplied. A source close to the business said that Laing O’Rourke is now interested in tapping into the purse of a Middle East investor, which would enable the company to further expand its global operations.

The group’s investment assets, held in separate registered companies, are not said to be involved and would stay with Laing O’Rourke.

Laing O’Rourke declined to comment.

The group operates in the Middle East through Al Naboodah Laing O’Rourke, a joint venture company where the partner is Saeed & Mohammed Al Naboodah Holdings.

The jv’s current workforce is more than 12,000. Al Naboodah is seen in some quarters as the most likely investor to take up the opportunity to forge a closer invovement with Laing O’Rourke.

The jv recently completed Dubai International Airport, the Mall of the Emirates Snow Centre and the National Bank of Dubai.

Laing O’Rourke           2007              2006

Turnover:                   £3.0bn            £2.3bn
Pre-tax profit:            £45m              £34m