R – back to basicsThirty-year gas sales deal

Bonus payments

person av Trude Meland, Norwegian Petroleum Museum
All Phillips employees got a little extra in 1997, when a results-based bonus was introduced to “motivate personnel by rewarding a good effort when the company met the targets it had set.”
— "Here comes the result bonus!" first page of EkofiskNews no 4, 1996
© Norsk Oljemuseum

Known as the performance incentive programme (PIP), this had been in use internationally within the group since 1993. It was intended to give management a better opportunity to recognise employee work on safety and financial results.[REMOVE]Fotnote: EkofiskNytt, no 4, “Nå kommer resultatbonusen”, week 9, 1996.

The scheme covered the whole Phillips workforce in the Norwegian division – including personnel employed at the Emden and Teesside pipeline terminals.

Various components

The system comprised various components which could add up to a maximum bonus of six per cent of basic pay, with the first payment taking place in February 1997. For that to happen, however, the goals had to be achieved. These targets were set both for the whole group and in the Norwegian division. Failure to meet them meant a lower payout.[REMOVE]Fotnote: EkofiskNytt, no 4, “Og dette mener noen av fagforeningene”, week 9, 1996.

The unions took a positive view of the programme, and several had pressed for it over a long period. The Ekofisk Committee argued that the workforce had made a fantastic contribution – and would now get their reward. At the same time, the unions would have preferred to see the bonus paid as an equal amount to everyone rather than as a percentage of basic pay – which meant that those with the highest earnings got the biggest reward.[REMOVE]Fotnote: EkofiskNytt, no 2, “Resultatet for 1996 det beste i selskapets historie”, 1997.

Results for 1996 were the best in Phillips’ history.[REMOVE]Fotnote: EkofiskNytt, no 3, “Godt resultat for 1996”, week 7, 1997. The Norwegian division also did well, with profit up by 40 per cent from 1995.[REMOVE]Fotnote: EkofiskNytt, no 4, “Slik beregnes resultatbonusen”, week 9, 1997. That was reflected in a bonus of no less than 5.32 per cent of basic pay.[REMOVE]Fotnote: EkofiskNytt, no 13, “Resultatbonus”, 1997.

Rumours then began to circulate that nothing would be paid for 1997. The Norwegian Oil Industry Association (OLF) had questioned whether the collective pay agreement for hourly paid workers permitted such payments. This question had to be resolved by Norway’s Labour Court.[REMOVE]Fotnote: EkofiskNytt, no 4, “Ingen bonusutbetaling”, week 9, 1998. The conclusion was that bonuses for personnel covered by the offshore pay agreement represented a breach of its terms. That meant no payout for the Norwegian division. But Phillips would not accept such an outcome. It wanted all personnel to be treated equally – everyone was involved in creating value. So the outcome was that nobody got a bonus in 1997, which would otherwise have totalled 4.5 per cent of basic pay.[REMOVE]Fotnote: EkofiskNytt, no 16, “Bonusordning på plass”, 1998.

Problem resolved

Pay negotiations in 1998 resolved the problem, making it possible once again to pay bonuses to all employees. Agreement was reached at local level on a special company-tailored pay system which could allow this.[REMOVE]Fotnote: EkofiskNytt, no 1, week 2, 2002.

The system was also revised so that it conformed to the scheme which applied in the rest of the group, with a maximum bonus of 14 per cent for personnel on the Norwegian payroll.

A four per cent bonus was awarded for 1998 – at a time when the company was in a difficult position and in the middle of a downsizing process.

Personal bonuses

An individual performance incentive programme (I-PIP) was also introduced in 2000 in order to recognise a particularly good commitment. Employees or teams could be nominated if they had pursued assignments affecting the company’s results, made a special contribution in excess of the company’s goals, had created value or enhanced efficiency through innovative ideas, or had directly affected the company’s results.

All personnel could nominate colleagues or teams for a personal bonus. A management jury then decided which of these were qualified.  Terms such as “significant” and “above expectations” were key criteria for selection. These were individuals or teams who had met their targets and contributed    more than expected or provided a level of service well above customer expectations, or who had made a significant effort to improve safety or eliminate safety risk.

The I-PIP was a supplement to the PIP, and 10-20 per cent of the workforce qualified for this individual pay-out.[REMOVE]Fotnote: EkofiskNytt. (2001, nr 1 uke 2)

R – back to basicsThirty-year gas sales deal
Published 18. September 2019   •   Updated 30. September 2019
© Norsk Oljemuseum
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