Introduction: The first thing that springs to mind when you mention the name John Lewis is an image of a high street retail giant. Indeed the John Lewis Partnership is one of the UK’s top ten retail businesses with 27 John Lewis department stores and more than 166 Waitrose stores, the upmarket supermarket chain owned by the partnership, in Great Britain. The first store opened in Oxford Street London in 1864 with the first branch of the Waitrose chain opening in 1904.
But for many, what may be an unknown detail about the John Lewis Partnership is that it is also the largest example of worker co-ownership in Great Britain. All 63,000 permanent staff are partners in the business, they share in the profits and shape the companies development. It is the commitment of the staff as Partners to the business which provides a unique source of competitive advantage that has fuelled 75 years of profitable growth and a reputation amongst customers and suppliers unparalleled in the UK retail industry.
What Speden Lewis imbued his Partnership approach with was an understanding that profit is an imperative of commerce. The model upon which the John Lewis Partnership has developed and flourished provides us with a valuable pool of knowledge from which we may draw as we seek to develop alternative businesses, anchored to the principles of social economy. This case study looks at some of the underlying organisational principles and in particular at the involvement of workers as company partners and the company structure that upholds the principles of cooperative ownership in shaping policy and company development.
What distinguishes the John Lewis Partnership from other businesses is its legal form.
First and foremost it is a business with a constitution; it is a business that is not dictated to by the whims of shareholder profit but rather is based on a series of principles, of which the happiness of its members is writ large as the ‘supreme purpose’ of the Partnership in its constitution. Such happiness depends upon workers having a satisfying job in a successful business. The constitution establishes a system of ‘rights and responsibilities’, which places on all Partners the obligation to work for the improvement of their business. Principles: The principles of the John Lewis Partnership relating to Purpose, Power, Profit and Members read;
• Purpose The Partnership’s ultimate purpose is the happiness of all its members, through their worthwhile and satisfying employment in a successful business. Because the Partnership is owned in trust for its members, they share the responsibilities of ownership as well as its rewards – profit, knowledge and power.
• Power Power in the Partnership is shared between three governing authorities, the Partnership Council, the Partnership Board and the Chairman. Profit The Partnership aims to make sufficient profit from its trading operations to sustain its commercial vitality, to finance its continued development and to distribute a share of those profits each year to its members, and to enable it to undertake other activities consistent with its ultimate purpose.
• Members The Partnership aims to employ people of ability and integrity who are committed to working together and to supporting its Principles. Relationships are based on mutual respect and courtesy, with as much equality between its members as differences of responsibility permit. The Partnership aims to recognise their individual contributions and reward them fairly. John Lewis Gribbs Causeway History: It was not until the creation of the first Trust Settlement in 1929, when the John Lewis Partnership became a legal entity, that all the profits were available for distribution amongst the company’s partners, i. e. its employees. Spedan Lewis, founder of the John Lewis Partnership, sacrificed personal ownership to fulfil his underlying vision of employee ownership, enabling employees to take forward his experiment in ‘industrial democracy’ 1 . In 1950 came the second Trust Settlement following which the residual interest of the partnership For further reading on Speden Lewis’s views see: Lewis, S. Partnership for All (1948) and Lewis, S. Fairer Shares (1954). 1 1 founder was transferred to a Trust company. The constitution states: The trustee of the Settlements is John Lewis Partnership Trust Limited (‘the Trust Company’) and its Chairman is the Partnership’s Chairman. Its other directors are the Deputy Chairman and the three Partners elected every year by the Partnership Council as Trustees of the Constitution. Partners and a framework for looking at problems together. ’ 3 John Lewis Solihull In keeping with technological advances and changing social, economic and environmental circumstances, the constitution of the John Lewis Partnership was updated in 1998/99. Speden Lewis’s view of what a business should be were in many respects visionary; that is, a commitment to establish a better form of business, a business which is not driven by the demands of stakeholders. The continued realisation and evolution of this vision presents a challenge for the workforce partners. That challenge is to demonstrate, through commitment, that the principle of co-operative ownership, with shared rights and responsibilities for the improvement of the business and to share in its rewards, can compete against conventional businesses generating private shareholder capital. The benefits Lewis aspired for his workers as owners were ‘the sharing of gain, knowledge and power. ‘ 2 This business ideal, or John Lewis model, whilst an alternative to the adversarial style of worker/manager relations in other companies, is not a panacea for worker tensions. What it provides is ‘a transparent and disciplined code of values for all 2 Expectation of Partners: The constitution of the John Lewis Partnership clearly outlines what expectations it has of its employee partners. These are mutually supportive of the needs of the Partnership and the Partners. Some of those which stand out as laudable in support of the Partners include:
• Recognising that information is the basis of democratic participation, the Partnership aims for openness, tolerance and freedom of expression. There must be full opportunity for enquiry, criticism and suggestion, even at the risk of controversy between Partners or outside the Partnership. No Partner should consciously fail to tell management what it ought to know. The Partnership takes no account of age, sex, marital status, sexual orientation, ethnic origin, social position or religious or political views. 4
• 3 http://www. johnlewispartnership. co. uk/Templ atePage. aspx? PageType=CAT&Page4 The constitution of the John Lewis Partnership; introduction, principles and rules. January 2000, 2nd Edition April 2004. (http://www. johnlewispartnership. co. uk/assets/ pdf/csrConstitution. pdf – at 20/07/05) 4 Constituent groups named largely reflects those named under section 75 of the NI Act.
• • The Partnership encourages Partners to fulfil their potential and increase their career satisfaction in the Partnership, by: o i. promoting Partners of suitable ability into vacancies rather than recruiting newcomers; o ii. encouraging changes of responsibility on a trial basis if necessary; o iii. helping Partners to learn as much as they can about the Partnership and its activities; o iv. providing knowledge and training to help them carry out their responsibilities better; o v. encouraging their general education and interests in fields not directly related to their work. Partners in exceptional need may receive financial assistance, normally through the Partnership Council or other councils. can be stated to be of particular relevance to the employee partners it would be the ‘Partnership Council’. Within the Partnership Council at least 80% of representatives are directly elected with a key role in holding the principle management to account on any matter whatsoever. In addition it also concerns itself with those matters directly affecting partners, such as, pensions, the social life of the Partnership as a community and for directing charitable giving through corporate social responsibility. The John Lewis Partnership contributes to the communities in which it operates in a number of ways, which would normally include fostering links with schools, institutions, charities and local authorities. The development of links locally as well as globally may include ‘charitable giving, Partner volunteer work, customer panels and much more’. 5 John Lewis Watford In addition to the above, the Partnership has a set pay scale ratio between the highest and lowest salary. John Lewis Bluewater Democratic Ownership: The principle of democratic ownership eschewed by the John Lewis Partnership is anchored to the three core mainstays, known as the ‘governing authorities’: the Partnership Council; the Partnership Board and the Chairperson. In so far as one of these The partnership council is pivotal in enumerating Partner concerns. Equally important in gathering those concerns, opinions and ideals are the lines of communication between partners and council representatives (and indeed the Partnership Board and Chairman). The structure which enables those concerns to be accurately communicated is http://www. johnlewispartnership. co. uk/Templ atePage. aspx? PageType=CAT&Page6 3 through a series of councils and Fig 1: Lines of Communication. committees (see fig 1 below). Essentially communication is enabled across the divisions of the Partnership (Waitrose and John Lewis) by replication of the regional management structure. Consequently each division has a series of Branch Councils and Forums for managers. These in turn are supported and endowed with the opinions of non-managerial partners through a system of committees for communication. As if this unique communication framework was not robust enough, further protection comes from the office of Partners Counsellor and the system of Registrars. They sit outside the formal governing structure and act as ombudspersons to work with the formal structure to ensure the culture of co-ownership continues to thrive. There are few social economy organisations that operate on the scale of the John Lewis Partnership. For those that aspire to the ideals of cooperative ownership and to succeed as social businesses, operating within the world of free market commerce, there are key lessons to be learned from JLP. This is not solely around sharing profits, but also of ensuring that providing the workers with a voice is based on a model of practice rather than rhetoric. In this respect ensuring that the lines of communication between all tiers of the workforce are open and that opinions are not merely heard but acted upon. In addition to this the principles that underpin internal relations are expressed with equal vigour to key strategic external partners, i. e. the customer, the supplier and the wider community locally and globally. http://www. johnlewispartnership. co. uk 4