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Over a quarter of Capita's IT Services division were given pay rises in the April review this year, the firm has said, but the rest of them will have to wait until business is better.
ITS managing director Peter Hands and ops director Steve Rick said in a conference call on Friday that the pay rises they had managed to squeeze through were all they could afford under the circumstances.
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"Would I like to do more pay rises? Of course I would," Hands said. "Can we afford to based on the performance of the business over the last three years? No we can't.
"The fact of the matter is that ITS missed its profit target last year by more than 50 per cent and we're in a performance-based culture."
They added that the people who had received pay rises were already being underpaid in many cases.
"What we tried to do is we tried to use the money that we could spend on bringing up some people who were, as a result of the way the biz had been created, doing exactly the same jobs as others but were well behind their colleagues in terms of how they were remunerated, which quite frankly was grossly unfair," Rick said.
"We used what funds we had to address some of the inequities and anomalies in the pay system this year so we could go into next year in a much better position. Inevitably some people were winners in that process and some people weren't," he added.
Hands also said that the process of the pay review was much more complicated than the company had anticipated because of the fact that staff had joined the team from outsourcing or from other divisions or from acquisitions.
"We had numerous Ts&Cs… people with different anniversary dates, bad data, people who hadn't been looked after, who'd been made promises that had been broken. Frankly it was quite tough to get that cycle done," he said.
"Just so you're aware, we're not enjoying the benefits of big pay rises or bonuses either," he claimed. "It's not one rule for one group and one rule for another. Everyone in the business is feeling the pain and we want to make sure we're in a better position to start 2014."
During the call, Hands and Rick faced questions from workers about why the company had spent millions on acquisitions while workers were left without raises. But they said that investment had to be made to keep the group as a whole going and that ITS would be better off now that the group had gobbled Northgate Managed Services for £65m.
"Most of the acquisitions that the group have made have not been for ITS, although one of the biggest ones has been for ITS and one of the reasons I determined we needed to do that was we needed to grow some scale to make ourselves more competitive in the market," Hands said. "Particularly when you're doing infrastructure or ITS, having scale is the name of the game to be able to be competitive. So I make no apology for the fact of bringing in Northgate."
The ITS bosses also insisted that IT staff couldn't just blame sales workers for the division's poor performance.
"Of course everyone is working really hard, but let me just be really, brutally clear here. We have had a sales performance issue. Sales performance is not just about the card-carrying, commission-carrying, coin-operated salesmen not performing, it's about the quality of the solutioning that gets done, it's about the understanding of the cost models," Hands said.
"Frankly we've lost too many deals on price where we've loaded too much cost in… That's down to a lot of poor leadership but nonetheless we have solutioned badly and that's not just the salesman's job. We have overspent in some cases by as much as 100 per cent against the original budget that was put together for a job of work for a client and usually that also means we're late and we take penalties.
"So yes we have a sales engine performance issue but we have to perform as a group, as ITS, before we can start to dole out pay rises."
Some Capita ITS downed tools on Friday in protest over pay. ®
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